FPG ：Under the current circumstances, the U.S. dollar and U.S. bond yields are experiencing an upward trend, which is putting pressure on gold prices 1. [Bank of America Raises U.S. Bond Yield Expectations] Bank of America has significantly revised its forecasts for U.S. bond yields. The bank now predicts that two-year U.S. bond yields could reach 4.75% by the end of this year, up from the previous estimate of 4.25%. Additionally, Bank of America anticipates that the 10-year U.S. bond yield might reach 4% by the year's end, compared to the earlier forecast of 3.5%. Bank of America's rationale is grounded in the absence of a U.S. economic recession, which implies higher interest rates. Even if a "soft landing" occurs, it could lead to a more extended period of the Federal Reserve tapering its balance sheet, thereby boosting demand for U.S. bonds. The bank maintains that a 25-basis-point interest rate hike by the Federal Reserve later this year remains its baseline expectation. Comments: The ongoing upward trajectory of U.S. bond yields suggests that the prospect of interest rate hikes is still looming, which is unfavorably impacting gold prices. 2. [Concerns Over Japan's Credit Rating Downgrade] Market participants are expressing concerns about the potential downgrade of Japan's credit rating, particularly in the event of the country's eventual departure from the U.S. interest rate environment. Kim Eng Tan, senior director of global ratings, warned that any sudden increase in interest rates or alterations to monetary policy by the Bank of Japan could trigger a debt crisis in Japan. Japan's substantial national debt is a key vulnerability for its sovereign credit rating. Comments: This scenario could lead to a fall in U.S. stocks, prompting a potential rise in gold prices as a hedging strategy. 3. [Moody's Downgrades Banks, Highlights Real Estate Risks] Moody's recently downgraded the credit ratings of several banks, both large and small, in the United States. The downgrade affected 10 small and medium-sized banks, including institutions like Top Financial Bank, Prosperiti Bank, Webster Finance, and Fulton Finance. Additionally, six large banks, including Micron, Bank of United States, and List, were impacted. Moody's cited the expansion of exposure to commercial real estate as a significant risk in the banking sector. This expansion is attributed to the Federal Reserve's ongoing interest rate hikes, the trend toward remote work reducing demand for office space, and tightening credit for commercial real estate projects. Comments: The downgrade of bank credit ratings and increased risk in the commercial real estate sector had a negative impact on U.S. stocks, resulting in a broad-based decline. 4. [EU's Limitation in Providing Security to Ukraine] On the 8th, Peter Stano, spokesperson for the EU's foreign and security policy, emphasized that the EU is unable to offer security to Ukraine as it falls outside the EU's mandate. Stano clarified that security discussions fall under the jurisdiction of NATO and certain countries, rather than the EU. Comments: Europe's concerns about potential repercussions from Russia remain evident, leading to this acknowledgment of limitations. 5. [Putin's Decree for Ruble Settlements for Agricultural Exports] On the 8th, Russian President Putin signed a decree allowing purchasers of Russian agricultural exports to pay in rubles. This move comes after Russia's connection to the SWIFT payment network was severed due to the crisis with Ukraine. Despite Russia's repeated attempts to rejoin the system, approval has not been granted. Comments: Russia's effort to de-dollarize its transactions continues, as evidenced by the country's decreasing dollar reserves. 6. [Russia's Oil Export Price to India Hits Lowest Since Russian-Ukrainian War] The Indian Ministry of Industry and Commerce reported that the average price of Russian oil exports to India in July, including freight costs, was $68.17. This marks a decrease from $70.17 in May and a significant drop from $100.48 a year ago. Although the price remains above the $60 limit set by Western nations on Moscow, it doesn't incorporate freight charges. Analysis suggests that India's imports have declined in the past two months due to OPEC+ producers adhering to production reduction commitments. However, there is an expectation for shipments to India to rebound from October. Comments: Despite external warnings, India's oil imports strategy has remained relatively unchanged, with the country continuing to adapt to global market conditions. FPG Special Analyst King’s Analysis: The recent combination of weak economic indicators, warnings about U.S. banking credit ratings, and lackluster corporate earnings has led to an increased preference for the U.S. dollar and U.S. bonds over gold. Although gold is currently weakening, its potential for further decline is limited. Considering the relative performance of other commodities, gold has actually held up well. If the global economic outlook worsens, there could be a buying opportunity for gold. FPG Special Analyst Dawson Daosheng’s Insights: Saudi Arabia's renewed commitment to support OPEC and its allies in production reduction efforts led to a rise in crude oil futures, countering earlier demand concerns caused by international trade data. However, China's weaker import and export figures in July, along with decreased crude oil imports, have raised questions about future crude oil demand. Additionally, the end of the summer driving season in the U.S. is approaching in early September, so investors should be cautious about potential corrections in the crude oil market. Dave, a Special Analyst at FPG, Offers: As eurozone governments phase out or opt out of support measures implemented a year ago in response to soaring energy prices, the eurozone economy might contract by up to 5% in 2024. Furthermore, indicators predicting future inflation have surged to their highest levels since 2010, pointing toward an average price growth rate of 2.57% from 2028 to 2033. Long-term bond yields are outpacing those of short-term bonds, with investors demanding a higher maturity premium to account for extended risk periods. FPG Special Analyst Yue Lin’s Perspective: Moody's, a globally recognized credit rating agency, announced on the 7th that it would downgrade the credit ratings of several small and medium-sized U.S. banks, while also placing some large U.S. banks on a downgrade watchlist. This move led to a decline in U.S. bank stocks and the collective decrease of the three major U.S. stock indexes. On a broader scale, some Federal Reserve officials have hinted at a potential halt in interest rate hikes. Federal Reserve official Huck stated that the U.S. economy is on a stable trajectory and that the Federal Reserve might have reached a point where it can maintain stable interest rates. For now, Huck believes that keeping interest rates stable is necessary, emphasizing the potential for an economic soft landing. While the U.S. unemployment rate may rise slightly, it's not expected to increase significantly. Huck does not advocate over-tightening monetary policy and suggests the possibility of lowering interest rates starting sometime next year. The above analysis is only for the views of market researchers and is for reference only and is not Regarded as a specific investment suggestion. #Forex #trading #tradingforex