Daily Summary: Gold drops to 3-month low as central banks turn hawkish

• Wall Street indices swung during the cash session today. Main US benchmarks launched the session lower, gained later on but has given big part of those gains since

• S&P 500 trades 0.1% higher, Nasdaq gains 0.6%, Dow Jones drops 0.1% and Russell 2000 is 0.8% down at press time

• Fed Chair Powell repeated during his testimony before the US Senate committee today that two more rate hikes this year would be appropriate. Powell also said that Fed does not see rate cuts anytime soon

• Shares of US banks found themselves under pressure after Fed Chair Powell said that regulators are considering increasing capital requirements in the aftermath of recent banking turmoil

• USD strengthened in the second half of the day, putting pressure on precious metals. Gold is trading around 1% lower and drops to level not seen since mid-March 2023

• European stock markets indices traded lower today. German DAX dropped 0.2%, French CAC40  and UK FTSE 100 traded around 0.8% down while Dutch AEX finished flat

• Bank of England surprised with a 50 basis point rate hike, putting the main rate at 5.00% - the highest level since September 2008 (exp. 4.75%). GBP gained in a knee-jerk move but has given back all of those gains later on

• Morgan Stanley and Goldman Sachs now expect Bank of England to deliver a 50 basis point hike at the August meeting.

• The Central Bank of the Republic of Turkey hiked the 1-week repo rate by 650 basis points, from 8.50 to 15.00%. While the scale of the hike was massive, it was much smaller than 1250 basis points (21.00% rate) expected by the market

• TRY plunged to a fresh all-time low against USD and EUR. USDTRY trades over 4% higher on the day

• Swiss National Bank delivered a 25 basis point rate hike, in-line with market expectations. SNB revised inflation forecasts lower, triggering a pullback on CHF market. However, SNB also said it cannot rule out further rate hikes

• Norges Bank surprised with a bigger-than-expected rate hike, raising the key interest rate by 50 basis points to 3.75% (exp. 3.50%). Norges Bank revised inflation forecasts higher and hinted that more rate hikes are coming. NOK gained following the decision

• US jobless claims came in at 264k, slightly above 260k market estimate. Data for the previous week was revised higher from 262 to 264k

• Natural gas dropped after an EIA report showed a 95 billion cubic feet build in US natural gas inventories. Increase was bigger than 90 bcf expected and above a 5-year average for the period

• DOE report showed a bigger-than-expected 3.83 million barrel draw in US oil inventories (exp. -0.4 mb) and small increases in gasoline and distillate inventories

• Oil was initially muted after the DOE report but deepened daily declines later on. Brent and WTI trade over 3% lower on the day

GOLD dropped to the lowest level since mid-March amid central banks' hawkishness. GOLD broke below the lower limit of the Overbalance structure today and, according to Overbalance methodology, bearish trend reversal occurred. Source: xStation5