The Federal Reserve will hold its 11th FOMC meeting since they began rate-hikes
The Federal Reserve will begin its Federal Open Market Committee (FOMC) meeting exactly one week from today on Tuesday, June 13th. On the morning of the 13th, the government will release its latest report on inflationary pressures vis-à-vis the CPI (Consumer Price Index). This will be the last important piece of data that Fed officials will use to make their final decisions regarding monetary policy.
While their preferred inflation index is the PCE, the CPI will contain the most recent assessment of inflationary pressures. Inflation was above 9% just one month after the Federal Reserve initiated its first rate hike back in March 2022. In just over a year inflationary pressure has had a strong contraction.
Although the extremely hawkish and restrictive monetary policy of 10 consecutive rate hikes that took the Fed’s benchmark rate to between 5 and 5 ¼% has dramatically lowered inflation but it is still well above the Federal Reserve’s target. Fed members have been waiting for the data to indicate if inflationary pressures are headed toward their goal. However, while headline inflation has had a significant decline the core inflation index which omits food, energy, and housing has remained persistent and sticky between 5% and 6% since December 2022. Housing costs make up a large portion (about one-third) of the Consumer Price Index, and if you strip out food and energy costs housing costs are about 40% of the total CPI index.
Currently, there is an 81.1% probability that the Federal Reserve will initiate its first interest rate hike pause with under a 5 to 1 probability that the Fed will raise rates next week.
The Federal Reserve Bank of Cleveland “Nowcast” provides real-time daily estimates of the PCE and CPI levels. It uses daily oil prices, and weekly gasoline retail prices and combines them with monthly consumer prices to offer a time-sensitive forecast of inflation providing real-time insight.
According to Forbes, “Nowcasts of U.S. inflation for May suggest that headline inflation will slow, but that core inflation will remain well above the Fed’s target. On June 13, the U.S. Bureau of Labor Statistics will release the Consumer Price Index report for May. Headline inflation has decelerated sharply since last summer, but core inflation has remained in a narrower range. The latest nowcasts don’t imply that this will change much.”
The current assessment by the Cleveland Fed’s Nowcast is predicting that inflation will rise 0.19% month over month and core inflation will also rise by 0.45%. If these predictions are correct the annualized rate of inflation would be 4.1% and 5.3% respectively.
Although this would confirm that headline inflation is dropping below core inflation it is clear that components remain persistent, a dilemma for the Federal Reserve. Persistent inflation has also been highly supportive of gold. As of 6 PM EDT, gold futures basis the most active August contract is down $1.60 from the New York close and fixed at $1979.70.
PayPal and Venmo Bank Warning: What You Need to Know
Consumers who use PayPal, Venmo, or Square's Cash App to store their cash have been warned by the Consumer Financial Protection Bureau (CFPB) to avoid doing so. These mobile wallets are increasingly being used as substitutes for traditional banks, but the CFPB has warned that they are not as safe as banks during a financial crisis. The warning has come amid growing concerns about the security of funds stored in these apps, particularly as they are not subject to the same federal deposit insurance as banks.
The CFPB's warning is significant as more and more people are turning to mobile payment apps to manage their finances. PayPal, Venmo, and Cash App are all popular payment apps that allow users to send and receive money, as well as store funds. However, the CFPB has warned that these apps should not be used as substitutes for traditional banks, as they do not offer the same level of protection for consumers' funds. The warning has caused concern among users of these apps, many of whom may not have been aware of the risks associated with storing their cash in them.
The CFPB's warning is a timely reminder of the importance of being aware of the risks associated with mobile payment apps. While these apps can be convenient and easy to use, they are not without their risks. Consumers should be aware of the limitations of these apps and take steps to protect their funds, such as only storing small amounts of cash and transferring larger amounts to a traditional bank account. By taking these steps, consumers can ensure that their funds are safe and secure, even in the event of a financial crisis.
PayPal and Venmo Bank Warning Overview
What is the PayPal and Venmo Bank Warning?
The Consumer Financial Protection Bureau (CFPB) has issued a warning to consumers who use payment apps like Venmo, Cash App, and PayPal to store their funds. The warning states that these payment tools are not bank accounts and the funds stored in them are not insured by the Federal Deposit Insurance Corporation (FDIC).
Why is the Warning Important?
The warning is important because it highlights the risks associated with storing funds in payment apps. In the event of a bank run or a crisis, the funds stored in these apps may not be safe. The warning also emphasizes the importance of understanding the difference between bank deposits and stored funds in payment apps.
Who is Affected by the Warning?
Consumers who use payment apps like Venmo and PayPal to store their funds are affected by the warning. The warning is particularly relevant to those who use these apps as a substitute for a traditional bank or credit union account. The warning is also relevant to those who store their long-term savings in payment apps, as their funds may not be covered by deposit insurance.
In summary, the PayPal and Venmo Bank Warning highlights the importance of understanding the risks associated with storing funds in payment apps. Consumers should be aware that the funds stored in these apps are not insured by the FDIC and may not be safe in the event of a bank run or a crisis. It is important to differentiate between bank deposits and stored funds in payment apps and to use these apps only for their intended purpose.
The Risks of Using Payment Apps
Payment apps like Venmo and PayPal have become increasingly popular in recent years as a convenient way to send and receive money. However, the Consumer Financial Protection Bureau (CFPB) has warned that using these apps as a substitute for a traditional bank account can be risky.
How Do Payment Apps Work?
Payment apps work by linking to a user's bank account or credit card and allowing them to transfer money to other users through the app. These peer-to-peer payment apps are often used for splitting bills, paying rent, or sending money to friends and family.
What Are the Risks of Using Payment Apps?
One of the main risks of using payment apps is that they are not FDIC-insured like traditional banks. This means that if the app were to go out of business or suffer a data breach, users could lose their money. Additionally, payment apps are not subject to the same regulations as banks, which means that they may not have the same level of security or privacy protections in place.
Another risk of using payment apps is that they may not offer the same fraud protections as credit or debit cards. If a user's account is compromised, they may not be able to recover their funds. Payment apps may also be vulnerable to scams, such as phishing attacks or fake payment requests.
What Are the Safeguards in Place?
While payment apps may not be FDIC-insured, they do have some safeguards in place to protect users. For example, many payment apps use encryption and other security measures to protect user data. They may also offer two-factor authentication and other fraud prevention tools.
Additionally, payment apps may have dispute resolution processes in place to help users recover lost funds or resolve payment disputes. Some apps may also offer purchase protection or other insurance policies.
However, it is important for users to understand the risks associated with using payment apps and to take steps to protect themselves. This may include using strong passwords, enabling two-factor authentication, and only sending money to trusted individuals. Users should also be wary of phishing scams and other fraudulent activity.
Overall, while payment apps can be a convenient way to send and receive money, users should be aware of the risks and take steps to protect themselves.
The Importance of FDIC Insurance
What is FDIC Insurance?
FDIC stands for Federal Deposit Insurance Corporation, an independent U.S. government agency that provides deposit insurance to protect depositors in case a bank or savings institution fails. FDIC insurance covers deposits in FDIC-member banks and federally insured financial institutions, which include insured bank deposits, such as checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs).
How Does FDIC Insurance Protect Consumers?
FDIC insurance protects consumers by providing insurance coverage in case a bank or savings institution fails. If a bank or savings institution fails, the FDIC will step in and pay depositors up to the insurance limit of $250,000 per depositor, per insured bank. This means that if a depositor has more than $250,000 in one bank, the excess amount may not be covered by FDIC insurance.
What Are the Limits of FDIC Insurance?
FDIC insurance has limits that depositors should be aware of. First, FDIC insurance only covers deposits in FDIC-member banks and federally insured financial institutions. Deposits in non-FDIC-insured financial institutions are not covered by FDIC insurance. Second, FDIC insurance only covers up to $250,000 per depositor, per insured bank. If a depositor has more than $250,000 in one bank, the excess amount may not be covered by FDIC insurance.
It is important for consumers to understand the limits of FDIC insurance and to make sure that their deposits are covered by FDIC insurance. Consumers should also be aware of the different types of accounts that are covered by FDIC insurance, such as checking and savings accounts, money market deposit accounts, and certificates of deposit (CDs), and should make sure that their deposits are spread out among different FDIC-insured financial institutions to maximize their FDIC insurance coverage.
In light of recent warnings from the Consumer Financial Protection Bureau (CFPB) about the risks of keeping money in payment apps like PayPal and Venmo, it is important for consumers to understand the importance of FDIC insurance and to make sure that their deposits are covered by FDIC insurance. Consumers should also be aware of the risks associated with non-FDIC-insured financial institutions and should take steps to protect their deposits by spreading them out among different FDIC-insured financial institutions to maximize their FDIC insurance coverage.
The Consumer Financial Protection Bureau's Role
What is the CFPB?
The Consumer Financial Protection Bureau (CFPB) is a government agency responsible for consumer protection in the financial sector. The agency was established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act.
What is the CFPB's Role in Protecting Consumers?
The CFPB's primary role is to oversee financial institutions and ensure that they comply with federal consumer financial laws. The agency also provides consumers with information and resources to help them make informed financial decisions.
The CFPB has the power to investigate and take enforcement action against financial institutions that violate consumer protection laws. The agency also works with other government agencies to coordinate oversight of the financial industry.
What is the CFPB Doing About the PayPal and Venmo Bank Warning?
CFPB Director Rohit Chopra recently issued a warning about the risks of storing funds in payment apps like PayPal, Venmo, and Cash App. The agency found that billions of dollars are stored on these apps, which may lack federal insurance coverage in the event of financial distress.
The CFPB is urging consumers to use payment apps as a convenience, but not as a substitute for a traditional bank account. The agency is also working with payment app providers to ensure that consumers are aware of the risks of storing funds in these apps.
As the federal financial services watchdog, the CFPB plays a crucial role in protecting consumers from financial harm. By providing oversight and enforcing consumer protection laws, the agency helps to ensure that consumers have access to fair and transparent financial services.
Alternative Options for Keeping Your Money Safe
What Are Some Alternative Options for Keeping Your Money Safe?
If you are concerned about the risks associated with keeping your money in payment apps like PayPal and Venmo, there are several alternative options available. Some of the most popular options include traditional banks, credit unions, and online banks like Synchrony Bank, Green Dot Bank, and First Republic Bank.
What Are the Pros and Cons of These Options?
Traditional banks and credit unions are often considered to be the safest options for keeping your money, as they are insured by the FDIC and NCUA, respectively. This means that your deposits are protected up to $250,000 per account in case of bank failure. Additionally, these institutions typically offer a wide range of products and services, including savings accounts, checking accounts, and investment opportunities.
Online banks, on the other hand, often offer higher interest rates and lower fees than traditional banks. They may also offer additional features like mobile banking and direct deposit. However, they may not offer the same level of customer service and may be less well-known and established than traditional banks.
How Do These Options Compare to PayPal and Venmo?
Compared to payment apps like PayPal and Venmo, traditional banks and credit unions offer much greater protections for your money. While payment apps are not insured by the FDIC or NCUA, these institutions are. Additionally, traditional banks and credit unions typically offer a wider range of products and services, including savings accounts, credit union accounts, and traditional bank accounts.
Online banks like Synchrony Bank, Green Dot Bank, and First Republic Bank offer many of the same benefits as traditional banks, but with higher interest rates and lower fees. However, they may not offer the same level of customer service and may be less well-established than traditional banks.
Ultimately, the best option for keeping your money safe will depend on your individual needs and preferences. It is important to do your research and compare the pros and cons of each option before making a decision.
Conclusion
The recent warning by the Consumer Financial Protection Bureau has highlighted the potential risks associated with storing money on payment apps like PayPal and Venmo. While these apps provide convenience and ease of use, they are not a substitute for a traditional bank account.
Users should be aware that funds held in these apps may not be insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration, leaving them vulnerable to financial uncertainty in times of crisis.
It is important for users to understand the limitations of payment apps and to use them only for their intended purpose – quick and easy transactions. Users should consider transferring funds to a traditional bank account for long-term storage and protection.
In addition, users should take steps to secure their accounts, such as using strong passwords and enabling two-factor authentication. It is also advisable to regularly monitor account activity and report any suspicious transactions.
Overall, while payment apps like PayPal and Venmo offer convenience and flexibility, users should be aware of the potential risks and take steps to protect their funds. By understanding the limitations of these apps and using them responsibly, users can enjoy the benefits of digital payments without putting their money at risk.
Frequently Asked Questions
Is it safe to link my bank account to PayPal or Venmo?
Linking your bank account to PayPal or Venmo can be safe as long as you take the necessary precautions. Both platforms use encryption to protect your financial information. However, it is important to use a strong and unique password for your account and enable two-factor authentication for added security.
Are there any risks associated with storing money on Venmo or PayPal?
According to the Consumer Financial Protection Bureau, storing money on Venmo, PayPal, or CashApp for the long term might not be safe during a crisis. These platforms are not FDIC-insured, which means that your funds are not protected in the event of a bank failure. It is recommended that you transfer your funds to your bank account as soon as possible.
Can Venmo or PayPal freeze my account?
Yes, Venmo and PayPal have the right to freeze your account if they suspect fraudulent activity or a violation of their terms of service. If your account is frozen, you will not be able to access your funds until the issue is resolved. It is important to read and understand the terms of service before using these platforms.
What measures can I take to protect my Venmo or PayPal account?
To protect your Venmo or PayPal account, you should use a strong and unique password, enable two-factor authentication, and regularly monitor your account for any suspicious activity. You should also avoid sharing your account information with anyone and only use trusted devices to access your account.
Are there any alternatives to Venmo and PayPal?
Yes, there are several alternatives to Venmo and PayPal, such as Zelle, Google Pay, and Apple Pay. It is important to research and compare the features and security measures of each platform before choosing one.
What should I do if I suspect fraudulent activity on my Venmo or PayPal account?
If you suspect fraudulent activity on your Venmo or PayPal account, you should immediately contact customer support and report the issue. You should also change your password and enable two-factor authentication to prevent further unauthorized access to your account.
Gold prices are modestly up and silver a bit weaker in midday U.S. trading Monday. Both markets pushed well off their early session lows when the U.S. dollar index lost its good early gains and as crude oil prices rallied. August gold was last up $6.00 at $1,975.50 and July silver was down $0.092 at $23.655.
Asian and European stock markets were mixed today. U.S. stock indexes are mixed near midday. Gains in the metals were limited today in the aftermath of a stronger U.S. non-farm payrolls jobs rise in last Friday’s May employment report. That data reminded the marketplace that the Federal Reserve is likely to remain hawkish on its monetary policy for longer—even if it does do a pause in the rate-hike cycle at the June FOMC meeting.
In weekend news, Saudi Arabia decided to unilaterally cut its crude oil production by around 1 million barrels per day, starting in July. Meantime, the OPEC-plus cartel at its meeting decided to leave its collective crude oil output unchanged.
The key outside markets today see the U.S. dollar index near steady. Nymex crude oil prices are higher and are trading around $72.75 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.887%.
Technically, August gold futures bulls have the overall near-term technical advantage. Bulls’ next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at the May low of $1,949.60. First resistance is seen at $1,985.00 and then at $2,000.00. First support is seen at today’s low of $1,953.80 and then at $1,949.60. Wyckoff's Market Rating: 6.5.
July silver futures bulls and bears are on a level overall near-term technical playing field. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the May low of $22.785. First resistance is seen at $24.00 and then at last week’s high of $24.12. Next support is seen at today’s low of $23.32 and then at $23.00. Wyckoff's Market Rating: 5.0.
July N.Y. copper closed up 450 points at 377.25 cents today. Prices closed nearer the session high. Short covering was featured. The copper bears still have the overall near-term technical advantage. However, a six-week-old downtrend on the daily bar chart has been negated. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 400.00 cents. The next downside price objective for the bears is closing prices below solid technical support at the May low of 354.50 cents. First resistance is seen at last week’s high of 378.90 cents and then at 385.00 cents. First support is seen at 370.00 cents and then at 365.00 cents. Wyckoff's Market Rating: 4.0.
US Dollar Depreciation: Causes and Implications for the Global Economy
The US Dollar has been losing value in the global economy, and this has been a cause for concern for many people. The dollar has been the dominant currency in the world for decades, but recent events have led to its decline. Many factors have contributed to this decline, including the COVID-19 pandemic, the US-China trade war, and the Federal Reserve's monetary policy.
The dollar's decline has had significant implications for the global economy. As the dollar loses value, other currencies, such as the euro and the yen, have gained in value. This has made it more expensive for countries that rely on the dollar to import goods and services. In addition, the decline in the dollar's value has led to inflation in the United States, as the cost of imported goods has increased. This has put pressure on the Federal Reserve to raise interest rates, which could further slow down the economy.
Despite the challenges posed by the dollar's decline, there are also opportunities. For example, a weaker dollar could make US exports more competitive in the global market. It could also encourage foreign investment in the United States, as assets become cheaper for foreign investors. However, these benefits may be short-lived, as a weak dollar could also lead to higher inflation and a slower economy. It remains to be seen how the dollar's decline will play out in the coming years, but it is clear that it will have far-reaching implications for the global economy.
The US Dollar in the Global Economy
The Basics
The US dollar is the world's reserve currency, which means that it is widely accepted and used in international transactions. It is also the most traded currency in the world, with a share of around 88% of all foreign exchange trades. The US dollar's dominance in the global economy is due to several factors, including the size and strength of the US economy, the stability of the US political system, and the liquidity of US financial markets.
The value of the US dollar is measured by the US Dollar Index (USDX), which tracks the value of the dollar against a basket of currencies, including the euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. The USDX is used by investors and traders to monitor the dollar's performance in relation to other major currencies.
Factors Affecting the US Dollar's Value
Several factors can affect the value of the US dollar in the global economy. One of the most important factors is the strength of the US economy. When the US economy is growing and expanding, the value of the dollar tends to rise, as investors and traders flock to US financial markets in search of higher yields and returns.
Another factor that can affect the value of the US dollar is the actions of the US Federal Reserve. The Federal Reserve can influence the value of the dollar by adjusting interest rates and implementing monetary policy measures. When the Federal Reserve raises interest rates, it can make the dollar more attractive to foreign investors, which can drive up its value.
The value of the US dollar can also be affected by global economic events and trends. For example, when emerging markets experience economic growth and stability, they may become less reliant on the US dollar, which can lead to a depreciation of the dollar's value. Similarly, when the eurozone or European Central Bank takes actions that affect the euro, it can impact the value of the dollar relative to the euro.
In conclusion, the US dollar's value in the global economy is influenced by a complex set of factors, including the strength of the US economy, the actions of the US Federal Reserve, and global economic trends and events. Understanding these factors can help investors and traders make more informed decisions about how to invest in the US dollar and other currencies.
The Role of the Federal Reserve
The Federal Reserve, also known as the Fed, is the central bank of the United States. It plays a crucial role in the country's economy by implementing monetary policies that influence interest rates, inflation, and employment. The Fed has a significant impact on the value of the US dollar in the global economy.
Monetary Policy
The Fed's monetary policy involves controlling the supply of money in circulation. By increasing or decreasing the money supply, the Fed can influence inflation and economic growth. When the Fed increases the money supply, it can lead to inflation, which can decrease the value of the US dollar. Conversely, when the Fed decreases the money supply, it can lead to deflation, which can increase the value of the US dollar.
Interest Rates
The Fed also has the power to set interest rates, which can affect the value of the US dollar. When the Fed raises interest rates, it can make the US dollar more attractive to foreign investors, which can increase its value. Conversely, when the Fed lowers interest rates, it can make the US dollar less attractive to foreign investors, which can decrease its value.
Quantitative Easing
Quantitative easing is a monetary policy tool used by the Fed to stimulate the economy by increasing the money supply. The Fed does this by purchasing government bonds and other securities from banks, which increases the banks' reserves and allows them to lend more money. This can lead to inflation, which can decrease the value of the US dollar.
Overall, the Fed plays a critical role in the value of the US dollar in the global economy through its monetary policy, interest rate decisions, and quantitative easing programs. Investors and other countries closely monitor the Fed's actions and decisions, as they can have a significant impact on the value of the US dollar.
Impact on the US Economy
The weakening of the US dollar has both positive and negative effects on the US economy. This section will discuss the impact of the US dollar losing value on inflation and deflation, exports and imports, and investments and profits.
Inflation and Deflation
A weak US dollar can lead to higher inflation in the United States. This is because a weak dollar makes imports more expensive, which in turn increases the cost of goods and services. On the other hand, a stronger dollar can lead to deflation, which is a decrease in the general price level of goods and services. This is because a stronger dollar makes imports cheaper, which in turn lowers the cost of goods and services.
Exports and Imports
A weak US dollar can make US exports more competitive in foreign markets, as they become cheaper for foreign buyers. However, a weak dollar can also make imports more expensive, which can hurt US consumers and businesses that rely on imports. A strong US dollar can have the opposite effect, making US exports more expensive and less competitive in foreign markets, but making imports cheaper for US consumers and businesses.
Investments and Profits
A weak US dollar can make US investments more attractive to foreign investors, as they can buy more US assets for less money. However, a weak dollar can also hurt the profits of US multinational companies that operate abroad, as their foreign earnings are worth less when converted back into US dollars. A strong US dollar can have the opposite effect, making US investments less attractive to foreign investors, but increasing the profits of US multinational companies that operate abroad.
Overall, the impact of the US dollar losing value on the US economy is complex and depends on a variety of factors, including inflation, exports and imports, and investments and profits. While a weak US dollar can have some positive effects, it can also have negative effects on the US economy.
Frequently Asked Questions
Why is the US dollar losing value?
The US dollar has been losing value due to a variety of factors, including the increasing national debt, the ongoing trade deficit, and the Federal Reserve's monetary policy. The US government has been borrowing more money than it can pay back, which has led to an increase in the money supply and a decrease in the value of the dollar. Additionally, the US has been importing more goods than it exports, which has also contributed to the weakening of the dollar.
What happens if the US dollar loses reserve status?
If the US dollar loses its status as the global reserve currency, it could have significant consequences for the US economy and the global financial system. The US would lose its ability to borrow money at low interest rates, and the demand for US dollars would decrease, leading to a further decline in the value of the currency. Other countries would also be less likely to hold US dollars as a reserve currency, which could lead to a shift towards other currencies such as the euro or the yuan.
What happens when the US dollar loses value?
When the US dollar loses value, it becomes more expensive to purchase goods and services from other countries, as the exchange rate decreases. This can lead to inflation in the US economy, as the prices of imported goods increase. Additionally, US exports become more competitive, as they are cheaper for foreign buyers, which can help to boost the US economy.
Will the US dollar lose its status as the global reserve currency?
While it is possible that the US dollar could lose its status as the global reserve currency, it is not a foregone conclusion. The US dollar has held this position since the end of World War II, and it remains the most widely used currency for international transactions. However, the rise of other currencies such as the euro and the yuan, as well as the ongoing economic challenges facing the US, means that the dollar's position as the global reserve currency is not guaranteed.
How much value has the dollar lost since 1971?
Since the US abandoned the gold standard in 1971, the value of the dollar has declined significantly. In 1971, one US dollar was worth 1/35th of an ounce of gold. Today, one US dollar is worth around 1/1800th of an ounce of gold. This represents a significant decline in the value of the dollar over the past 50 years.
Are banks preparing for a major devaluation of the US dollar?
While there is no evidence to suggest that banks are actively preparing for a major devaluation of the US dollar, many financial institutions are diversifying their holdings to reduce their exposure to any potential risks. This includes investing in other currencies, commodities, and assets that are not denominated in US dollars. Additionally, some central banks are exploring the possibility of creating their own digital currencies, which could potentially challenge the dominance of the US dollar in the global financial system.
Ether’s (ETH) decentralized finance (DeFi) activity has declined in the bear market, and the sector faces further competition from Ethereum’s annual staking reward of 4%, according to Glassnode analysts. However, a DeFi narrative is building around liquid staking derivative (LSD) tokens, which could revive Ethereum’s network activity. The percentage of gas consumed by DeFi protocols has dropped from 34% in 2020 to between 8% and 16% presently, with nonfungible tokens (NFTs) commanding the maximum share of 25–30%, according to a recent report from Glassnode.
Ethereum gas usage by transaction type. Source: Glassnode
Glassnode’s supply-weighted price index for DeFi, priced in United States dollars and ETH, recorded a 90% loss since early 2021. The so-called DeFi “blue chips,” which represent a basket of governance tokens from well-known DeFi protocols like Uniswap (UNI), MakerDAO (MKR), Aave (AAVE), Compound (COMP), Balancer (BAL) and SushiSwap (SUSHI), have lost 88% of their market capitalization from all-time highs of $45 billion in May 2021.
ETH vs. DeFi tokens price performance. Source: Glassnode
DeFi blue chip tokens have underperformed against ETH during bullish market rallies and experienced a more severe drop than ETH “on the downside during the bear.” The analysts predict that since the staking of ETH now yields 4%, it will act as a “new hurdle rate over which token returns must jump.” This yield represents the benchmark rate for Ether investors. Leading lending protocols like Aave and Compound offer between 2–3% yields on lending stablecoins and Ether. Moreover, DeFi protocols also come with smart contract risk, which is eliminated with proof-of-stake validators. Staking has become popular among Ethereum investors, especially after the Shapella upgrade in April 2023, which enabled redemptions from the staking contract. By the end of May, Ethereum users staked 21.63 million ETH worth $40.021 billion, representing 18% of Ethereum’s total supply. LSD platforms like Lido and Rocket Pool account for one-third of this massive market. These applications offer a tokenized representation of staked ETH, allowing investors access to the staking yields without compromising liquidity. A growing trend among Ethereum investors is interacting with LSD financialization (LSDfi), which aims to put the liquidity offered by the LSD tokens to use in DeFi applications. Related: LSD for DeFi: Tenet, LayerZero partner to drive cross-chain liquid staking adoption
Is LSDfi the solution?
LSDfi leverages the liquidity of LSD tokens into DeFi-like lending protocols and liquidity on exchanges for higher yields. Given that a considerable amount of ETH is staked with the LSD platforms, LSDfi has the potential to revive DeFi activity. A Dune analytics dashboard by data analyst Defimochi shows the total value locked (TVL) in LSDfi protocols has touched $411 million, rising exponentially since mid-May. Some of the popular names in the sector are Pendle Finance, Lybra Finance, Curve Finance and Alchemix l.
LSDfi total value locked. Source: Dune
The liquidity of LSD tokens on Curve Finance — the largest stablecoin exchange in the market — has surpassed $1.5 billion. Curve also enabled the minting of its overcollateralized stablecoin crvUSD (CRVUSD) using Frax Protocol’s staked Frax Ether (SFRXETH) as collateral. New protocols like Lybra Finance and Pendle Finance, which are looking to leverage the liquidity provided by LSD tokens, have also become popular. As has happened before with DeFi, newer applications will likely tap the liquidity of LSD tokens by facilitating liquidity mining of their governance tokens for early depositors. While these can bring decent gains for some users, these protocols could carry smart contract risks and the chance of getting rug pulled, introducing the risks that come with the higher gains that LSDfi provides.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Central banks' gold holdings drop for the first time in over a year in April, says World Gold Council
Global central bank gold holdings fell for the first time in more than a year in April, as Turkey sold over 80 tonnes of gold, the World Gold Council (WGC) said in a report.
Total central bank gold reserves dropped by 71 tonnes in April. The last time central bank gold holdings declined was in March 2022, and the net drop was one tonne, the report pointed out.
The monthly decrease is not representative of a trend reversal, said WGC's senior analyst Krishan Gopaul. "Country-level data reveals that, far from a sudden wave of central bank selling, the drop in reserves was primarily due to Türkiye," Gopaul said Friday.
The Central Bank of Turkey sold 81 tonnes of gold in April, reducing its gold holdings to 491 tonnes. This was after the central bank already sold 15 tonnes in March.
Last year, Turkey bought the most gold out of all central banks, purchasing 148 tonnes and increasing its gold reserves to 542 tonnes — the highest level on record.
The report explained that country-specific circumstances led Turkey to offload some of its gold.
"This was a specific response to local dynamics rather than a change to their long-term gold policy: the gold was sold into Türkiye's domestic market to satisfy very strong bar, coin and jewelry demand following a temporary partial ban on gold bullion imports," the report noted. "It remains to be seen if this selling will continue and, if so, at what pace."
Other sales in April were significantly smaller tonnage-wise. The National Bank of Kazakhstan sold 13 tonnes, the Central Bank of Uzbekistan offloaded two tonnes, and the National Bank of the Kyrgyz Republic sold 0.6 tonnes.
While massive gold selling is not likely to become the new trend, central bank gold purchases are slowing down.
Only four central banks bought gold in April, with Poland reporting additional 15 tonnes, the People's Bank of China buying eight tonnes (its sixth monthly purchase in a row), the Czech National Bank adding two tonnes, and the Central Bank of Mongolia purchasing an additional tonne.
The WGC is looking past April's drop in central bank gold holdings and projects more buying throughout 2023.
"Our view is also supported by findings from our latest Central Bank Gold Reserves survey, which shows reserves managers remain broadly positive towards gold," Gopaul said. "It's also worth noting that the Central Bank of Iraq recently announced a 2.5t purchase in May and signaled more to come."
Turkey's case is unique
Turkey has seen a surge in gold demand in the past year as citizens embraced the precious metal as a hedge against inflation, political and economic uncertainty, and local currency devaluation.
"Local demand for gold in Turkey is simply a desire to protect their purchasing power from a declining Lira," William Stack, financial advisor at Stack Financial Services LLC, told Kitco News. "Gold is a great asset to own when you are in a financial pinch because it can be sold when necessary."
Rising gold demand led to a jump in gold imports, which weighed on Turkey's widening current-account deficit. In response, Turkey introduced steps to curb gold imports in February and began selling its gold reserves to meet domestic demand.
But the move to offload some of its gold is not necessarily a losing scenario for the Turkish central bank, Stack pointed out.
"One reason Turkey is selling is that gold has risen 10% from a year ago, in dollar terms. In Lira-terms, the gain is more dramatic — 70-85%," he explained. "If Turkey sold gold internationally, it would weaken the Lira further. But when they sell gold to Turkish residents for Lira, it reduces the amount of Lira in the marketplace, thereby helping to strengthen the currency."
Gold, silver gain on ideas FOMC will pause at next meeting
Gold and silver prices are solidly higher in midday U.S. trading Thursday, amid a big U.S. economic data dump that culminates with Friday morning's U.S. jobs report. The precious metals are boosted today by ideas the Federal Reserve may pause in its interest-rate-hiking cycle. August gold was last up $15.80 at $1,997.90 and July silver was up $0.403 at $23.985.
The Wall Street Journal reported today the Fed is likely to pause in its rate-hiking cycle at the June FOMC meeting, before raising rates again later this summer. That's a shift from the consensus marketplace belief just recently that the Fed would again raise rates at the June FOMC meeting. However, a "sizzling jobs report" on Friday would throw cold water on the Fed pause, said the Journal report.
There was a very heavy U.S. economic data slate Thursday. The data was a mixed bag but the ADP national employment report for May did run hot, showing a rise of 278,000 jobs—well above market expectations. Traders are now looking ahead to the Labor Department's employment situation report for May on Friday morning. The key non-farm payrolls number is seen coming in at up 190,000 compared to the April non-farm jobs number of up 253,000.
Asian and European stock markets were mostly higher overnight. U.S. stock indexes are higher at midday. The marketplace has been assuaged by the U.S. House of Representatives handily passing the government debt-ceiling-extension deal reach between Republicans and Democrats. The measure now goes before the Senate and is expected to also pass.
Bitcoin voters could decide close U.S. elections as bipartisan political support grows – Lyn Alden
The key outside markets today see the U.S. dollar index solidly lower. Nymex crude oil prices are solidly higher and trading around $71.00 a barrel. These two outside markets were also bullish elements for the metals markets today. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.677%.
Technically, August gold futures bulls have the overall near-term technical advantage. Bulls' next upside price objective is to produce a close above solid resistance at $2,050.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at this week's low of $1,949.60. First resistance is seen at $2,008.00 and then at $2,020.00. First support is seen at $1,985.00 and then at today's low of $1,970.10. Wyckoff's Market Rating: 6.5
July silver futures bulls and bears are back on a level overall near-term technical playing field. A four-week-old downtrend on the daily bar chart has been negated. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at $24.40 and then at $24.75. Next support is seen at today's low of $23.355 and then at $23.00. Wyckoff's Market Rating: 5.0.
July N.Y. copper closed up 800 points at 371.70 cents today. Prices closed nearer the session high. Short covering was featured. The copper bears still have the overall near-term technical advantage. Prices are still in a six-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 390.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 350.00 cents. First resistance is seen at today's high of 373.15 cents and then at 377.50 cents. First support is seen at this week's low of 362.20 cents and then at 360.00 cents. Wyckoff's Market Rating: 4.0.
In this article, I examine the concept and process of geoengineering as it relates to climate change, with particular scrutiny on whether geoengineering is solving a problem or engineering a problem.
As we continue through to the halfway point of 2023, the so-called emergency issues of the climate have once again come to the fore as the health topic of covid 19 regresses somewhat, although, as we shall see later, none of these things are standalone events.
As I write this article, pilot sites have sprung up in England, which are trial runs of 15-minute cities. It is based on the idea that everything you need can be accessed within a 15-minute radius. If you venture out of that zone, you risk fines and possible imprisonment. It is directly connected with the climate agenda, which you can read more about in Agendas 21 and 30.
I start with a speech by Prince Charles where he spoke of the need for a war-like approach to climate change in the form of a military-style campaign. On reflection, it sounded like more of a confirmation of something that was already happening.
What has humanity done to deserve such impending and extreme restrictions, with all the hallmarks of a more permanent lockdown? Let’s start with some definitions of the issue at hand.
The reported ‘climate crisis’ appears to stem from a belief about the threat of global warming to the survival of this planet. Regular conventions and summit meetings have been held since the 1960s to discuss the severity of this perceived issue and plan accordingly. In tandem, there have also been summit meetings on population control, such as the International Conference on Population and Development in Cairo in 1994, suggesting that both themes are connected.
Here is a video of scientist Carl Sagan explaining the greenhouse effect to Congress. According to the Council for Foreign Relations, there is a consensus of opinion about the science concerning climate change.
They cite a summary of that science from David Victor, an American Professor of International Relations, who summarises that the earth's temperature is rising at unprecedented rates, which will result in damaging effects across the world.
He puts this down to human activities using fossil fuels, deforestation, coal, oil, and natural gas. As a consequence of these activities, greenhouse gasses such as carbon dioxide have been emitted in sufficient amounts to cause the planet to trend toward global warming.
There are a group of climatologists that dispute this stance in that they claim there is no emergency as such. These include climatologists Dr. Judith Curry and Dr. John Christy.
Moreover, a global network of over 1100 scientists and professionals known as the “Global Climate Intelligence Group” or The CLINTEL Group has prepared an urgent message explained in this article.
Perhaps the use of the phrase climate change is something of a tautology since the earth is not a static ecosystem. If indeed there is a climate crisis, is it as described by the powers that be, or does the issue lie elsewhere?
FALSE PROPHECIES or INEXACT SCIENCE
Since as far back as the 1960s, many global leaders and political figures have been sending out alarming warnings in the form of predictions. This X22 report cites some of them from a Twitter feed. Here is a paraphrase of some of the identified warnings:
1966 – No more oil in 10 years
1967 – Dire famine forecast by 1975
1970 – Nitrogen build-up will make all land unusable
1970 – Ice Age by 2000
1974 – Ozone depletion will make life perilous
1980 – Acid rain will kill life in lakes
1989 – Rising sea levels will obliterate nations if nothing is done by 2000
2008 – Al Gore predicts an ice-free Arctic by 2013
2009 – British Prime Minister says we have 50 days to save the earth
None of the above has come to pass. This poses a fundamental question. Bearing in mind that science and political science are not one and the same, are the above merely false prophecies from the domain of political science, or is it a case of science not being so exact as to be predictable?
Maybe both have some truth to them, yet as this short clip about an ongoing project in Greenland shows, context and relativity are essential in research. In this project, ice is extracted from the ice sheet in Greenland over thousands of years to determine temperatures during that time.
Their results underline that when certain political authorities raise the alarm about the increase in warming by 1.5 degrees, they need to put relativity in context. In isolation, you can make research support many inaccurate viewpoints.
There is a third, more serious consideration when we consider context and the interface with political science. What if the political powers in question are creating the problem and then creating a solution to put the control of power firmly in their domain?
To appreciate why this is an important consideration, I refer to the book The Creature from Jekyll Island by G Edward Griffin, a highly acclaimed documentarist and writer with a flair for taking the complexity out of complex subjects to make them easier to understand. This book first came out in 1994.
Although the creature referred to in the title is the Federal Reserve, and the book focuses on the nature of its creation and the money agenda, various interconnected threads arise in his discovery which has a direct bearing on the climate agenda.
Griffin makes reference to the influence of the Fabian School of Economics in London, whose underpinning ideology was the achievement of a new world order by a more covert expression of socialism as opposed to a more forceful approach, such as what is experienced in communism.
In this approach, money moves from the government and, through various means, gets recycled back to them, which helps to give them more control and power and ultimately morphs them into a new world order, now known as the great reset. Back then, they discussed a one-world currency too.
Within this context, a new unconventional war was proposed in the pursuit of one-world governance, whose echoes found their way into Prince Charles's speech, and it has more to do with eliminating life than enhancing human lives.
It involves the Council of Foreign Relations, and The Club of Rome, who seek to express this ideology, and everything we are witnessing today is coming out of that playbook. I will return to this shortly. Within this historical context, we now look at a process called GeoEngineering.
Britannica defines geoengineering as‘the large-scale manipulation of a specific process central to controlling Earth’s climate for the purpose of obtaining a specific benefit.’
Solar radiation is a key influencing factor in how much is absorbed by the earth and reflected into space. The earth’s surface, cloud formation, and gases in the air are all dynamics in this process. Solar radiation management as a core theme of this process means a combination of technologies would need to be created and managed for this to happen.
Few would deny that our earth needs to be taken care of in a much more responsible way. I recall watching a documentary called A Plastic Ocean years ago, in which it was plain to see that our oceans are polluted due to human neglect.
The industrial revolution saw an increase in certain gas emissions and air pollution by corporate giants far beyond what any one individual could emit, but does the climate agenda change amount to such an issue of significant human neglect that it now requires geoengineering to correct the imbalance?
Collectively harm has been caused to the earth, so one could understand the corrective application of technology to restore balance to the earth’s ecosystem. However, in light of the findings of The Creature from Jekyll Island, it is necessary to probe further as to whether geoengineering is being deployed for a benefit or otherwise.
There is a data-rich website specifically dedicated to examining this question and the core related issues, and recently a powerful documentary was released called The Dimming.
The Dimming documentary examines weather modification through the dimming of the sun and looks at its implications for survival and living. It also examines the driving motivation behind geoengineering.
It scrutinises the extent to which geoengineers are experimenting with nature’s life support systems and examines whether they have considered the adverse effects of their methodology. In this documentary, certain things are debunked, namely:
1) Geoengineering as an experiment on the populous for nefarious reasons is a conspiracy theory.
2) The trails people witness in the sky are simply condensation trails and not artificial trails, which the layman calls chemtrails.
The documentary reveals vital point-to-point data extracted from cloud layers and other research and discovered:
1. A list of patents supporting geoengineering that goes back by at least 100 years.
2. Planes and aircraft are designed and fitted with nozzles for the express purpose of solar radiation management and the emission of chemicals into the sky to dim the sun.
3. Verification of trails that are not condensation trails, as we have been officially told, but emissions that cause artificial cloud formations designed to dim the sun and alter the ionosphere, resulting in weather modification.
4. Significant levels of aluminium in the cloud layers, which, when transmitted through nanotechnology, can get through the blood-brain barrier to cause serious illnesses such as dementia.
5. Methane deposits and craters pose an even greater threat than carbon dioxide over time.
6. The motive of military weather control by 2025.
The key objective of leading geoengineers, supported by government and military intervention, is to put 10-20 million tonnes of nanoparticles infused with certain chemicals into the sky on an annual basis.
Geoengineer and author David Keith argues for this necessity of emitting chemicals to dim the sun and cool the planet. He also adds that hundreds of thousands will die in this cause, and he sees no ‘moral hazard’ in this – this is the collateral damage we must accept for the greater good. He uses competitive language, such as winners and losers, suggesting this is not really about collaboration.
If you look at what is happening through four significant elements which form part of the building blocks of life, you will notice how the welfare of humanity is under assault from all angles.
For example, the blocking of the sun has implications for the life-enhancing process of photosynthesis. Clean air and water are needed to sustain all life forms. The earth and its soil layers determine forest and plant growth.
To expand your research into geoengineering and forest fires, view this PDF called ‘Forest Fire as a Military Weapon.’ More recently, this article exposed the probable cause of the so-called forest wildfires in California in 2017. To explore the water element of flash flooding, watch this video.
An example of the overall impact on Earth and forestation can be viewed in this video. Aside from the artificial cloud formations, hurricanes provide another perspective of geoengineering processes in action through the air.
Each natural element and area is connected and impacts another in this giant ecosystem. Is geoengineering behind why bees are now falling out of the sky, and plankton are dying?
The domino effect of current geoengineering is described in the documentary. On the one hand, sulphuric acid is released from aircraft to deplete the ozone layer. Combine that with the release of aluminium, barium, strontium, and manganese, which are manipulated by high radio and microwave frequencies to alter the ionosphere, which then alters weather patterns.
One consequential scenario is where warm water goes where it should not go. Methane deposits get released from frozen players in places like the Siberian tundra and rise into the air.
Over a 10-year period, the accumulation of methane in the air is said to be at least 100 times more potent than carbon dioxide. There is evidence of methane blowouts in certain parts of the globe that look like massive craters.
Our documentarists discovered that there is enough methane in these deposits to turn our planet into Venus several times over. This is reportedly being covered up. If this is true, it means a far more serious situation has been created by geoengineering.
It is one thing to err and go off balance and then to correct a course of action. It is quite another to allow it to descend to incompetence or, worse still, corruption if deliberately intended.
At best, the powers that be have gone too far, and instead of pulling back and finding a balance between risk and reward, they are now accelerating the very problem they say they are trying to avert. Life in all its forms is under assault.
The conclusion from the documentary is that the consideration of adverse effects has not just been omitted – it has been overridden. This has not happened by accident but by design, and now we have a more serious climate problem as a result of the current agenda of geoengineering.
The many patents reveal that this has been planned for a long time and that the reduction rather than the welfare of humanity is uppermost in mind. Recall that this is something Bill Gates has heavily invested in, and the trail of money is revealing in itself.
Furthermore, the military has a clear objective and plan to ‘own’ the weather by 2025. Why such extreme measures? The common argument is that it is for defence reasons. So who or what is the enemy?
From this documentary alone, the sun is a focal point of attack in the geoengineering process, and humanity, not including themselves, is deemed to be the causative agent in the demise of the climate.
FROM GEOENGINEERING to ENGINEERING
What has become clear not just from this documentary but from the declassified information concerning covid 19 is that the strategy of ‘gain of function’ has been applied with military precision to natural assets and that humanity is not simply potential collateral damage for the greater good.
To bring this point home, let’s now return to the book, The Creature from Jekyll Island, where non-conventional forms of war were discussed to weaken the natural immune systems of the economy and life itself in order to give way to a new world order.
The Iron Report 0f 1966:
The report From Iron Mountain documents the discussions of a think tank group focussing on new and alternative war-type mechanisms by which they could achieve their agenda and strengthen government while subjugating the masses to their plan.
Many of its participants belong to the Club of Rome and/or the Council of Foreign Relations. Various real or imaginary fear-inducing global threats were discussed, such as extreme poverty, alien invasion, and poisoning the environment.
The citations below summarise their strategic thinking:-
This is what Jacques Cousteau’s had to say in his interview with the United Nations in 1991:
“Should we eliminate suffering diseases? The idea is beautiful but perhaps not beneficial for the long term….In order to stabilise world population, we must eliminate 350,000 per day.”
The Club of Rome concluded that the fear of environmental disaster would be an appropriate substitute for conventional war, and Bertrand Russell echoes this.
“War, as I remarked a moment ago, has hitherto been disappointing in this respect, but perhaps bacteriological war may prove more effective. If a Black Death could be spread throughout the world once in every generation, survivors could procreate freely without making the world too full..”
The First Global Revolution report in 1991 extends this theme further;
“In searching for a new enemy to unite us, we came up with the idea that pollution, the threat of global warming, water shortages, famine, and the like would fit the bill… All these dangers are caused by human intervention…The real enemy, then, is humanity itself.”
Whatever you think of this report, and no matter which angles you view it from, what is clear is that it describes what is playing out before our eyes.
You can see the same actors at work. For example, besides our governments, Bill Gates has invested heavily in the dimming of the sun, just as he has invested heavily into vaccines and stated that they should be a compulsory requirement for all. You see Klaus Schwab regularly talking about a new world order. You see the move toward a CBDC.
This is a giveaway to the totalitarian state imposed on us as part of a new world order. The 15-minute cities are just another twist of the knife, a component of that climate agenda. Psychological strategies, including fear and propaganda, with military-type interventions are being deployed, and their processes are poisoning us.
This is not simply geoengineering gone wrong but an engineered plan in which humanity is both the subject of experimentation and the intended target for the greater good of a few power-hungry groups. Money, power, and control are dominating themes in which the global powers separate themselves from humanity.
A more severe climate issue has emerged based on the fallout of geoengineering practices rather than the original issue it purported to solve.
We are dealing with an engineered climate agenda with elements of truth and massive deception. Now it is imperative to sort fact from fiction and recreate a different reality based on truth.
FROM ENGINEERING to REVERSE ENGINEERING
So what can we do with this knowledge, and how do we redress what is going on from an individual and collective standpoint? The good news is that this can be stopped, and a combination of things needs to come together for a new healthier, and peaceful reality to emerge.
The remedial viewpoint would be to do your own research and do everything you can to strengthen your immune system, including growing your own food. The geoengineering website has many awareness-raising materials and community action plans to tackle the various issues.
However, for long-term results and to reverse engineer the impact of the damage sustained so far, I agree with the documentary's conclusion, which relays that lasting change has to be an inside-out approach.
Start by clarifying the objective and work back from that – this is the essence of reverse engineering. What’s worse than the agenda being laid out before us is a scenario where humanity remains paralysed by fear and does nothing to change things.
What is more empowering than the prevailing agenda is that humanity awakens, not simply to what is going on, but awakens to their true core nature, so they can rise above the fears of current reality to imprint and create something new on a practical front.
Here are some tips on how to get out of neutral gear and mobilise accordingly:-
TIPS
1. Revisit the natural laws of the universe and re-evaluate your partnerships with people and the things around you. How strong and harmonious are they? Adjust your alignment accordingly.
2. Research those who are void of conflicts of interest in order to move toward truthful reporting.
3. Use Vandana Shiva’s book on Oneness v The One Percent to develop a framework of action so you can become an Ecopreneur, not just an Entrepreneur.
4. Know yourself, meaning grasp your true potential and the power of your mind. The other side knows and executes this well, albeit for detrimental effect.
5. Adjust your attitude and create better experiences. For example, if you pick litter up from the ground, do so because you care about mother earth and not simply to correct someone else's neglect. One creates an experience of genuine care and gratitude, and the other can create an experience of irritation and resentment. You choose.
6. Know that every action you take, whether individual or collective, counts. That certainty will create its own 100th Monkey Effect.
7. Be willing to share your gifts and resources, no matter how small or big. Spontaneous acts of kindness create a true community, spreading like positive wildfire and spreading light that will dispel any darkness.
It's time for the Ecopreneur to rise!
About: Anita Narayan. (United Kingdom) My life's work is about helping individuals to greater freedom through joy and purpose without self-sabotage, so that inspirational legacy can serve generations to come. Find me at my Markethive Profile Page | My Twitter Account | and my LinkedIn Profile.
Gold posts first loss in three months, but markets focus on Fed's 'hawkish pause'
The gold market posted its first monthly loss since February, wrapping May down about $36. As markets eye the crucial Congress vote to lift the debt ceiling, some Federal Reserve speakers are pushing for a "hawkish pause" at the June 13-14 meeting.
The House of Representatives is set to vote on a bill to lift the $31.4 trillion debt limit on Wednesday – a critical step to avoid a default before the June 5 deadline provided by U.S. Treasury Secretary Janet Yellen. Voting is said to start late afternoon and end before 9 pm ET time.
"The far wings of both parties are expected to show some resistance, but this bill is expected to advance," said OANDA senior market analyst Edward Moya. "The Senate might have some difficulty passing the bill, but expectations are elevated that the U.S. will avoid defaulting on its debt."
For gold, a debt deal does not necessarily mean lower prices, Moya said in a note Wednesday. "The details behind the proposed piece of legislation include significantly lower spending, which will be a major blow to the economic outlook and likely trigger a much harder-hitting recession," he noted.
The more significant risk to the gold price is what the Fed decides to do in June and July, with market expectations shifting drastically in the last few weeks.
At the time of writing, the CME FedWatch Tool was back to projecting a 70% chance of a pause at the June meeting. The market leaned towards another 25-basis-point hike only a few trading sessions ago.
U.S. rate futures also started to price in a 70% chance of a pause by the Fed Wednesday, which is a u-turn from earlier in the session, according to Refinitiv's FedWatch.
Fed speakers trigger re-pricing
Expectations shifted after several Fed speakers leaned towards pausing or skipping a rate hike in June, which is a reversal from previous hawkish sentiments.
Philadelphia Fed President Patrick Harker said Wednesday that he supports a "skip" in rate hikes.
"I am in the camp increasingly coming into this meeting thinking that we really should skip," Harker said. But Friday's employment data "may change my mind," he added.
Fed Governor and vice chair nominee Philip Jefferson also said skipping a rate hike makes sense because it gives policymakers time to examine more data.
"Skipping a rate hike at a coming meeting would allow the (Federal Open Market) Committee to see more data before making decisions about the extent of additional policy firming," Jefferson said at a financial stability conference in Washington.
But not all Fed officials share this view. Federal Reserve Bank of Cleveland President Loretta Mester said no "compelling" evidence exists not to raise rates. "I don't really see a compelling reason to pause," Mester told Financial Times in an interview Wednesday. "I would see more of a compelling case for bringing the rates up and then holding for a while until you get less uncertain about where the economy is going."
In the meantime, macro data releases have supported more tightening by the U.S. central bank. The Federal Reserve's preferred inflation measure — the annual core PCE price index — accelerated to 4.7% in April versus the consensus forecast of 4.6%.
And the latest JOLTS job openings data showed that the labor market remains tight.
All eyes are on the U.S. April nonfarm payrolls report, scheduled to be published on Friday. "Market calls that the Fed is done hiking won't be able to shake off this labor market strength if Friday's NFP report confirms this trend," Moya said.
Despite gold's failure to maintain its gains after testing record highs earlier in May, analysts say it is a good sign that gold can trade above $1,950 an ounce. But the risk of falling back to the $1,900 remains, said Kinesis Money market analyst Rupert Rowling.
"Assuming the U.S. does ratify its new debt ceiling agreement, then June looks set to be a more challenging month for gold with more bearish factors than bullish ones," Rowling said Wednesday. "Attention will quickly switch to the U.S. jobs data and then the inflation data that comes out before the Federal Reserve meets to decide its June interest rate decision in the middle of the month."
At the time of writing, August Comex gold futures were trading at $1,981.20, up 0.21% on the day.
Gold prices are solidly higher in midday U.S. trading Tuesday, supported by a weaker U.S. dollar index and a downtick in U.S. Treasury yields to start the U.S. trading week. The yellow metal hit a nine-week low overnight. Short covering in the futures market and some bargain buying in the cash were also featured today. August gold was last up $17.10 at $1,980.20 and July silver was down $0.015 at $23.34.
Trader and investor attitudes are more upbeat this week. Republican and Democratic leaders have agreed upon a deal to raise the U.S. government's debt limit. House and Senate votes on the matter are likely to occur later this week.
Asian and European stock markets were mostly firmer overnight. U.S. stock indexes are mixed to firmer at midday.
The World Gold Council reported its survey shows 24% of central banks intend to increase their gold holdings in 2023. Reasons include higher inflation, geopolitical turmoil and interest rate worries.
Gold price trades below $1,950 ahead of Congress debt ceiling vote and June Fed decision
The key outside markets today see the U.S. dollar index down on a corrective pullback after hitting a two-month high last week. Nymex crude oil prices are solidly lower and trading around $69.50 a barrel. Meantime, the benchmark 10-year U.S. Treasury note yield is presently fetching 3.702%.
Technically, August gold futures prices hit a nine-week low early on today and then rebounded to score a bullish "outside day" up. Bulls have the slight overall near-term technical advantage. However, prices are in a four-week-old downtrend on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at $2,000.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,900.00. First resistance is seen at $1,985.00 and then at $2,000.00. First support is seen at $1,965.00 and then at today's low of $1,949.60. Wyckoff's Market Rating: 5.5
July silver futures prices hit a nine-week low Friday. The silver bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.00. First resistance is seen at today's high of $23.51 and then at $23.75. Next support is seen at $23.00 and then at the May low of $22.785. Wyckoff's Market Rating: 4.0.
July N.Y. copper closed down 160 points at 366.60 cents today. Prices closed near mid-range. The copper bears have the overall near-term technical advantage. Prices are in a six-week-old downtrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 385.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 335.00 cents. First resistance is seen at today's high of 371.10 cents and then at 375.00 cents. First support is seen at today's low of 362.70 cents and then at 360.00 cents. Wyckoff's Market Rating: 3.5.
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Bitcoin voters could decide close U.S. elections as bipartisan political support grows – Lyn Alden
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The gold market posted its first monthly loss since February, wrapping May down about $36. As markets eye the crucial Congress vote to lift the debt ceiling, some Federal Reserve speakers are pushing for a "hawkish pause" at the June 13-14 meeting.
Gold price trades below $1,950 ahead of Congress debt ceiling vote and June Fed decision
