Japanese officials’ ignoring of the continuous collapse of the Japanese yen exchange rate, along with the US Federal Reserve’s continued intention to raise US interest rates strongly during 2022, are still important factors for the continuation of the strong upward trend of the US dollar against the Japanese yen pair, with gains to its highest in 24 years. Its recent gains brought it to the resistance level of 136.72 and it settles around the level of 135.48 at the time of writing the analysis.

Amid the US central bank’s leadership of global central banks to raise interest rates to contain historical inflation. Bank Chairman Jerome Powell reiterated the comments he already made at the press conference after the June decision to raise the US interest rate by a massive 0.75%, raising it to 1.75%, although its impact was more pronounced on the stock and bond markets last week.

The US dollar’s declines last week were in contrast to its usual reaction to market concerns about the outlook for the global economy and many analysts still expect it will benefit from any further deterioration. Accordingly, the could rise to 106 pips this week. “The increased risks of a global recession, or at least a sharp slowdown, support further gains in the US dollar,” says Joseph Caporso, an analyst at the Commonwealth Bank of Australia.

All this leaves much to be determined this week by a flurry of important economic numbers from the US in the coming days, which includes the May edition of the Fed’s favorite inflation gauge; Core personal consumption expenditures price index. The consensus expects the core PCE price index to rise 0.4% last month, up from 0.3% previously, but from 4.9% to 4.8% year over year. Commenting on this, Kevin Cummins, chief US economist at Natwest Markets, says: “Not all of the strength in core CPI (such as airfare and auto insurance) will be fed into the core PCE deflation.”

We expect core PCE deflator to advance 0.4% (0.383% unrestricted), stronger than the 0.3% streak of gains in the previous three months but still less than the 0.6% gain in core CPI. On an annualized basis, our realization of our forecast would pull the core PCE inflation rate from 4.9% in April to 4.7% in May as the 0.6% rise from last May is off the mark.”

USD/JPY Analysis:

The general trend of the dollar yen currency pair is still bullish. Despite the technical indicators reaching strong overbought levels after the recent record gains, the continuation of the above mentioned factors guarantees the currency pair to continue to test ascending level. The closest to it is currently 136.20 and 137.00, respectively, and stability above the last level will strengthen expectations with a stronger upward move, psychological resistance 140.00 may be the ideal destination for the bulls.

On the downside, there will be no first break of the trend without moving below the 130.00 level. The USD/JPY currency pair will be affected today by the extent to which investors take risks or not, in addition to the announcement of the US consumer confidence reading.

Gold futures retreated from the gains that coincided with the beginning of trading this week, with the yellow metal entering the negative territory throughout the year. Metal commodities suffered a broad sell-off amid recession fears. With stocks still in a bear market and inflation high, will investors return to traditional safe assets?

Yesterday, the price of an ounce of gold jumped to the level of 1841 dollars, and then returned to the level of 1821 dollars an ounce today. In general, gold prices fell by about 1% during trading last week, which increased its losses since the start of the year 2022 to date to about 0.3%. The yellow metal is on track for a monthly decline of at least 1%. Also, silver, the sister commodity to gold, was trading relatively flat at the start of the week’s trading. Silver futures rose to $21.145 an ounce. The white metal comes out of a weekly loss of more than 2%, in addition to its decline since the start of the year 2022 to date by nearly 10%.

Despite the weak US dollar, investors are reacting to higher Treasury yields. In addition, investors are keeping an eye on the latest geopolitical developments after the Group of Seven nations will soon ban imports of Russian gold. US President Joe Biden announced Sunday that the Group of Seven will prevent the import of Russian gold, while the British government confirmed to the media that these countries agreed to the ban.

Investors do not believe that this will have any material impact on the economy because its contribution to the global metals market is minimal. Many countries with huge gold reserves and huge mining infrastructure will be willing to step in and make up the shortfall. However, Moscow contributed the second highest level of gold, totaling 330 tons in 2021.

Meanwhile, the dollar weakened on Monday, with the US Dollar Index (DXY), a measure of the US currency against a basket of major currencies, falling to the 103.91 level, down from an opening at 104.19. The index is emerging from a weekly decline of 0.7%, reducing its annual rise to 8.2%.

A weak dollar is beneficial for dollar-priced commodities because it makes it cheaper for foreign investors to buy them.

The US Treasury market was positive, with the benchmark 10-year bond yield rising 7.5 basis points to 3.2%. The two-year bond yield rose 7.5 basis points to 3.132%. Therefore, the spread between the two debt instruments was less than seven basis points, which is critical to market analysts because a reversal could signal a recession. However, gold is sensitive to the environment of higher prices because it causes it to raise the opportunity cost of holding non-yielding bullion.

In other metals markets, copper futures rose to $3.751 a pound. Platinum futures rose to $904.80 an ounce. Palladium futures rose to $1,861.50 an ounce.

Gold price forecast today:

The gold price is still moving within a downward correction, and the bears’ control of the trend will be strengthened if the gold price moves to the support levels of 1815, 1800 and 1785 dollars, respectively. All in all, I still prefer buying gold from every bearish level. On the other hand, the bulls will return to control the trend if the gold price moves towards the resistance levels 1855 and 1877, respectively. Technical indicators are in a neutral position with a bearish slope.

Gold futures posted modest gains yesterday due to weaker US dollar and lower Treasury yields. The price of the yellow metal has been struggling over the past three months due to the Fed’s tightening efforts, which drove up bond yields and strengthened the US currency. Analysts warn that the outlook for gold is bleak, so prices may not be able to touch $2,000 again. The price of gold moved towards the level of 1855 dollars an ounce after it fell to the support level of 1837 countries an ounce in the same trading session.

Gold prices are up 0.7% over the past week and are still up about 1% YTD 2022. In the same way, the price of silver, the sister commodity to gold, is trying to stay above the $22 level once again. Silver futures jumped to $22.195 an ounce. Accordingly, the price of the white metal is looking to recoup more of its losses as silver prices are now down by about 5%.

While gold hasn’t been able to shine as many thought in an inflationary environment, the precious metal has outperformed major benchmarks this year. Commenting on the performance, a team led by Michael Aaron, chief investment analyst at State Street Global Advisors wrote in their mid-year forecast, “From the beginning of 2022 to date, gold has outperformed the S&P 500, by 0.61% by 14.17%, showing its ability to Protection from declines in the stock market.

With financial markets approaching the second half of 2022, market analysts believe that investors can choose to add gold to their portfolios for an element of diversification.

The metals market found support from a weak dollar, with the US Dollar Index (DXY) sliding to 102.36, from the opening of 102.44. The index measures the performance of the US dollar against a basket of currencies. A weaker dollar is good for dollar-priced commodities because it makes them cheaper to buy for foreign investors. Another factor affecting the gold market. US Treasury yields were red across the board, with the 10-year yield falling 7.7 basis points to 2.961%. One-year yields rose one basis point to 2.206%, while 30-year yields fell 7.7 basis points to 3.114%.

Gold is generally sensitive in an appreciation environment because it raises the opportunity cost of holding non-yielding bullion.

In other metals markets, copper futures rose to $4.4385 a pound. Platinum futures fell to $1014.70 an ounce. And futures contracts for palladium fell to 1963.50 dollars an ounce.

According to gold technical analysis: The gold market may remain on hold until the announcement of the European Central Bank policy update and US inflation figures, factors that strongly affect investor and market sentiment. On the daily chart, the price of gold is still moving in its last range, and it will be the closest to new buying levels if it moves towards the support levels of 1828 and 1815 dollars, respectively. On the other hand, the bulls will need to breach the resistance levels of 1875 and 1888 dollars, respectively, to confirm the strong and continuous control over the direction of gold. I still prefer buying gold from every bearish level.