The Fed will cut rates | 12 May 2023

#SP500:

The Federal Reserve increased its policy rate for the tenth consecutive time, pushing the upper bound of the fed funds rate to 5.25%, the highest since August 2007. As inflation further decelerates, and the job market cools, investors should anticipate some rate cuts in the latter half of the year. Chairman Powell referenced the tight labor market as a reason to remain hawkish in the near term. As the Federal Reserve moves to restore price stability, they rely on a host of statistics to gauge risks to their outlook. The U.S. is poised to slip into recession later this year, which has implications for future rate decisions. Markets are convinced the Fed will cut rates.

Trading recommendation: buy 4110 and take profit 4200.

XAUUSD:

Global gold demand fell in the first three months of 2023 as large purchases by central banks and Chinese consumers were offset by reduced investor buying, the World Gold Council said. Total demand amounted to 1,081 tonnes, down 13% from the first quarter of 2022, the WGC said in its latest quarterly demand trends report. Among the bright spots during the first quarter, central banks bought 228 tonnes of gold, more than in any January-March period in data going back to 2000, the WGC said. China's jewellery demand was 198 tonnes, the most for any quarter since Q1 2015, as the end of COVID-19 controls unleashed consumer spending. On the other hand, purchases of gold bars and coins fell in Europe, Indian jewellery demand slipped to a three-year low and exchange traded funds storing bullion for investors sold gold, the WGC said.

Trading recommendation: range 2000 - 2080.

#WTI:

Crude is trying to reverse the recent washout in prices triggered by higher interest rates and recession fears mostly in the US banking sector. Investors also broadly expect the Fed to pause rate hikes at its June policy meeting. In China, however, factory activity contracted unexpectedly in April as orders fell and poor domestic demand dragged on the sprawling manufacturing sector. However, expectations of potential supply cuts at the next meeting of the OPEC+ producer group in June have provided some price support. U.S. oil rig count, an indicator of future output, fell by 3 to 588 this week, data from oil services firm Baker Hughes showed. A positive signal for the oil market!

Trading recommendation: buy 70.86 and take profit 75.50.