Hawkish Powell's Comments Brought Down the Gold Price
The gold (XAU) price declined by over 1% on Friday despite decreasing U.S. Consumer Sentiment numbers.
Gold declined by 2.8% last week—its sharpest drop in over a month—as the hawkish comments from Federal Reserve Chair Jerome Powell diminished expectations of interest rate cuts. Still, the broader macroeconomic environment is increasingly conducive to supporting the gold price as the U.S. monetary policy tightening cycle seems to approach its end. Also, Moody's (NYSE:MCO) reduced its outlook on the U.S. credit rating from stable to negative on Friday, but investors largely disregarded the announcement.
The gold price rose towards 1,940 in the early Asian and European trading sessions due to strong gold-buying activities from central banks. 'Central banks have bought 800 tonnes of gold over the last three quarters, well above our expectations,' said ANZ analysts in a research note.
Investors Assume the BOJ May End Its Ultra-Loose Monetary Policy
USD/JPY rose slightly on Friday, gaining 1.44% by the week's end, as the US dollar and Treasury yields moved higher, following hawkish signals from U.S. Federal Reserve officials.
The Bank of Japan (BOJ) raised its inflation predictions at the October monetary policy meeting as the prices continued to increase. Market participants are looking for indications that the BOJ might be nearing the end of its ultra-loose monetary policy. A more hawkish stance from the regulator will surely boost the Japanese yen's price. However, Japan's Corporate Goods Price Index data indicated that inflation decreased by more than 1% for the first time in over two and a half years. The report hinted at easing price-driving cost pressures, though this had minimal impact in bolstering the yen.
Today, the Japanese yen (JPY) hit a fresh one-year low. Thus, USD/JPY may reach 152.000 as the Japanese yen weakened. Now, market participants are observing any developments between Beijing and Washington as they may affect the whole Asia-Pacific region. This week, at the Asia-Pacific Economic Cooperation (APEC) summit in San Francisco, a key highlight will be the meeting of U.S. President Joe Biden and Chinese President Xi Jinping.
The New Zealand Dollar Is in a Downtrend
The New Zealand dollar (NZD) traded within a narrow range of 0.58800–0.59000 on Friday as speculation about the U.S. interest rates going higher pressured risk sentiment. At the same time, tighter Australian monetary policy failed to support the currency.
Market participants believe the Reserve Bank of New Zealand (RBNZ) will stay firm in its fight against sticky inflation. In October, the regulator held the borrowing rates steady at 5.5% for the third consecutive meeting but acknowledged ongoing intense cost pressures. This year's final policy meeting is scheduled for 29 November, and the market thinks the RBNZ will keep the base rate unchanged. Thus, the outlook for the New Zealand dollar seems bearish for now.
The NZD/USD rose slightly on Monday, hovering around 0.58900. Today, traders should focus on the New Zealand Food Inflation report at 9:45 p.m. UTC. Lower-than-expected figures will negatively impact NZD/USD, potentially bringing the price below 0.58800. However, the long-term bearish trend in the pair may reverse if the figures come out higher than expected.