Gold trading alert: slowing the pace of interest rate hikes expected to make the dollar "tumble", bullish sentiment burst gold prices hit a new five-month high

By    5 Dec,2022

After the report, futures traders linked to the Fed's policy rate scaled back bets that the Fed will soon slow its aggressive rate hikes. The market expects the Fed to raise the policy rate by just 50 basis points in December to a range of 4.25%-4.5% with a greater than 50% chance, compared to 77% before the report was released.

The dollar jumped 0.8% in response, once rising to near 105.60, but was affected by the dovish speeches of Fed officials, closing still down 0.2% to close at 104.49. Early in the Asian market on Monday, the dollar index extended its decline, once hitting a new low since June 29 to 104.18, with further support below at the June 27 low near 106.67.

Fed's Evans thinks pace of rate hikes will slow, but rates will peak "slightly higher" than forecast in September

Federal Reserve Bank of Chicago President Evans said on Friday that the Federal Reserve may need to raise borrowing costs to a "slightly higher" peak than predicted in September.

We're probably going to have to have a slightly higher peak in the federal funds rate, even though we may slow down" the pace of rate hikes, coming down from 75 basis points per hike in recent meetings, Evans said at an event in Chicago.

West imposes price limits on Russian oil, Russia warns move would jeopardize energy security

The G-7 and Australia announced on Dec. 3 that they will join the European Union in setting a $60 per barrel price cap on Russian crude oil exports by sea, effective as soon as Dec. 5.

The Czech presidency of the EU said in a social media post on December 2 that EU member states reached an agreement on the same day to set a price cap on Russian seaborne crude oil exports. After the agreement comes into effect, if the price of Russian crude oil exports exceeds $60 per barrel, EU companies will be prohibited from providing insurance and financial services for Russian crude oil shipments.

The G7 and Australia issued a statement on the same day, deciding to join the EU in setting a price cap on Russian crude oil. The statement said the move was aimed at "preventing Russia from profiting from the Ukraine crisis" and "reducing the negative economic impact of the Ukraine crisis".

European Commission President Von der Leyen said the EU's agreement on a price cap on Russian crude, combined with concerted action by the G7 and other countries, would significantly reduce Russian energy export revenues and help stabilize global energy prices.

But the Russian side said it would not accept this and warned that the move would jeopardize the EU's energy security.

According to foreign media reports, Russian presidential press secretary Dmitry Peskov said that Russia "will not accept this cap" and will make a quick assessment and then respond to it.

Leonid Slutsky, chairman of the Russian State Duma's (lower house of parliament) international affairs committee, warned that the EU's price cap on Russian crude exports would jeopardize the EU's own energy security.

Russia previously said it will not supply oil and petroleum products to countries that impose price limits on Russian oil. Russian Deputy Prime Minister Alexander Novak said in an interview with Russian media in October that Russia will not supply crude oil to any country that is prepared to impose price caps on it, regardless of the price offered, because "this practice (of price caps) is interfering with the market mechanism."