All articles tagged with #central banks
Global markets traded mixed as Pernod Ricard warned of weaker full-year sales due to U.S. and China demand weakness, oil slid on renewed Strait of Hormuz talks, China’s July industrial profits growth slowed, and Korea hiked rates to cool inflation; after-hours Nvidia beat estimates while Salesforce and Okta posted strong results, nudging futures higher ahead of Jackson Hole.
Bloomberg reports that rate hikes are expected across major economies beyond the U.S., with about two-thirds of tracked swap markets pricing higher policy next year. Fueled by energy costs, fiscal stimulus, and an AI-driven growth boom, inflation pressures could force central banks to tighten further, potentially turning bonds from portfolio ballast into a drag as yields rise and financing conditions tighten, weighing on both bonds and equities.
Gold rebounded as rate-hike expectations cooled after tame inflation, with bullion and gold mining stocks posting strong weekly gains. Central-bank buying, especially by China, and sustained physical demand underpin prices, while ETF flows into GLD and the cheaper GLDM attract investors. Analysts say the move is tactical rather than fear-driven, though volatility remains ahead of Jackson Hole and evolving Fed signals. Technically, gold’s break above the 50-day moving average suggests potential for further upside, with miners offering leverage but higher risk.
Gold surged to a seven-week high last week, reclaiming the 50-day moving average and breaking a downtrend since March, with a 4% one‑day jump that helped futures push higher even as yields cap opportunistic gains. ETF flows swung from a February peak of about $40B into substantial outflows (toward -$20B), then reversed as money returned to precious-metals funds; Chinese gold ETFs added about $1.2B over 14 sessions, underscoring renewed demand alongside central-bank buying per the World Gold Council. Goldman Sachs notes trend followers could flip to a net long of more than $10B if the breakout persists. The immediate test for bulls is holding above $4,000 and clearing the 200‑day moving average near $4,500, which could open room for further gains if momentum holds.
BNP Paribas Wealth Management forecasts gold could reach $5,000/oz within 12 months, implying more than 20% upside as the dollar weakens (about a 3.5% decline over the year) amid inflation and debt concerns; the World Gold Council notes 89% of central banks plan to boost gold allocations, and retail ETF inflows via GLD could follow, supporting a bullion rally amid easing geopolitical tensions.
Gold jumped above $4,200 on mounting policy uncertainty, bolstered by ongoing central‑bank buying and Japan’s yen intervention; MarketGauge’s Michele Schneider remains bullish on gold but says silver could post bigger gains if inflation pressures reappear and confidence in governments erodes, with silver potentially breaking $64 and moving toward $75–$80 on a renewed upside setup.
The piece critiques Fed chair Kevin Warsh’s opaque, at-times illogical press conference after the Fed held rates at 3.5–3.75%, arguing the messaging undermines the central bank’s legitimacy; it contrasts this with the Bank of England’s clear, well-documented communications and notes that a transparent framework is crucial as energy shocks influence inflation, with PCE inflation around 3.7% in June and markets remaining sensitive to policy expectations.
The Federal Reserve held its policy rate at 3.5%–3.75% for the fifth straight meeting amid rising oil prices tied to Middle East tensions, with three policymakers—Neel Kashkari, Lorie Logan and Beth Hammack—dissenting in favor of a 25-basis-point increase. Officials maintained a commitment to price stability, noting inflation remains elevated even as core inflation cooled modestly (around 2.6% in June). The dissent signals the risk that a rate hike could reemerge if energy-driven price pressures persist.
The Federal Reserve left its policy rate at 3.5%–3.75% at the latest meeting, marking a fifth straight hold, even as three officials—Neel Kashkari, Lorie Logan, and Beth Hammack—dissented in favor of a 25‑basis‑point increase. The decision kept the statement largely intact, noting inflation remains elevated due to energy shocks from Middle East tensions; June core inflation came in around 2.6%, suggesting inflation is easing but not yet on a firm path to the 2% target. Fed Chair Warsh reaffirmed the commitment to price stability while acknowledging policy challenges from supply shocks and energy prices.,
With inflation cooling only modestly and oil prices rising on Middle East tensions, the Federal Reserve is expected to hold rates at its upcoming meeting, though a 25-basis-point hike remains possible this year. Futures assign roughly a 37% chance of a move, reflecting a split among officials: some, like Loretta Mester and Lorie Logan, favor holding unless inflation proves stickier, while others including Kevin Warsh signal a potential move if inflation stays above target. The decision will hinge on inflation trends versus energy-cost volatility and how trading markets price in the risk of higher rates.
Fed officials are confronting renewed price pressures from oil, AI-driven demand, and tariffs, keeping a potential rate hike on the table for the July meeting even as inflation cools modestly; markets have priced in a meaningful chance of a move, and dissent from policymakers remains a possibility as the central bank weighs whether to hold or hike in a fragile inflation backdrop.
The IMF’s latest World Economic Outlook warns that renewed Middle East tensions could push inflation higher and disrupt supply chains, with global inflation projected to rise to about 4.7% this year before easing to 3.9% in 2027, while global growth slows to around 3% before rebounding to 3.4% in 2027. The euro area is expected to keep inflation above the ECB’s 2% target until 2028, suggesting more rate hikes could be on the horizon for major central banks, even as AI-driven gains support some economies. The report also highlights risks to energy and food security if disruptions persist, underscoring that inflation remains the primary threat to a smoother global recovery.
Gold fell into the second half of 2026, marking its worst three-month period since 2013 as inflation fears and potential U.S. rate hikes weigh on non-yielding assets; futures and spot prices declined, silver dropped as well, while analysts from Amundi say gold still serves as a diversification tool amid a volatile macro backdrop and ongoing central-bank diversification away from dollars.
Goldman Sachs says gold has more upside and could hit about $4,900 per ounce by end-2026, driven by structural factors like EM central-bank diversification and rising gold reserves; near-term headwinds include a hawkish Fed and weaker ETF demand, but the bank expects these to ease as macro conditions shift and investors diversify into gold.
Gold has corrected about 29% from its January all-time high of $5,589/oz, pressured by a stronger U.S. dollar and expectations of multiple Fed rate hikes as inflation resurges. The metal briefly slipped below $4,000 in late June, finding short-term support near $3,960–$3,970 before bouncing to about $4,050. Banks remain optimistic on gold’s longer-term outlook, citing ongoing central-bank buying and concerns over fiat currency debasement, with year-end targets cited up to $6,300.