The last big piece of bad news this week has just been defused.
Just now, the remarks by Kazuo Ueda, Governor of the Bank of Japan, have effectively put the market’s worries to rest.
This morning, the BOJ’s monetary policy meeting raised rates by 25 basis points, fully in line with market expectations.
The biggest concern was that Governor Ueda might make very hawkish statements—calling for consecutive, rapid rate hikes—which would directly blow up Japan’s yen carry trade, and then trigger a global shortage of liquidity.
But today Ueda’s comments were neither particularly hawkish nor dovish. In the end, the negative surprise risk was defused smoothly.
His core message was very clear: inflation is a bit high right now, so they chose to raise rates; but there is no pre-set path for future hikes—there is no fixed schedule. Whether to hike next, how much to hike, all depends on real-time inflation data. They could pause, they could continue, or they could even increase the pace and magnitude of hikes—everything ultimately comes down to the data.
He also highlighted that the risks from the Middle East are not small. Oil prices may pose a risk of a second-round transmission to inflation. If tensions in the Middle East ease, that inflation pressure would drop significantly. So one of the major variables for the current market conditions has once again shifted back to Middle East geopolitics.
All of this week’s super central bank events have run their course. Every negative catalyst that needed to be released has been released, and there has been no unexpected “black swan.” As a result, gold and silver have started to rebound.
This rebound has conditions that could allow it to continue. But how far it can go depends on whether next week the leaders of the U.S. and Iran will meet and whether the Middle East situation can truly calm down—those are the key variables driving what happens next.
At next week’s UN General Assembly, Iran’s president and foreign minister have already obtained visas to travel to the United States. It will come down to whether Trump and his team will sit down and talk. $XAU $XAG
Just now, the remarks by Kazuo Ueda, Governor of the Bank of Japan, have effectively put the market’s worries to rest.
This morning, the BOJ’s monetary policy meeting raised rates by 25 basis points, fully in line with market expectations.
The biggest concern was that Governor Ueda might make very hawkish statements—calling for consecutive, rapid rate hikes—which would directly blow up Japan’s yen carry trade, and then trigger a global shortage of liquidity.
But today Ueda’s comments were neither particularly hawkish nor dovish. In the end, the negative surprise risk was defused smoothly.
His core message was very clear: inflation is a bit high right now, so they chose to raise rates; but there is no pre-set path for future hikes—there is no fixed schedule. Whether to hike next, how much to hike, all depends on real-time inflation data. They could pause, they could continue, or they could even increase the pace and magnitude of hikes—everything ultimately comes down to the data.
He also highlighted that the risks from the Middle East are not small. Oil prices may pose a risk of a second-round transmission to inflation. If tensions in the Middle East ease, that inflation pressure would drop significantly. So one of the major variables for the current market conditions has once again shifted back to Middle East geopolitics.
All of this week’s super central bank events have run their course. Every negative catalyst that needed to be released has been released, and there has been no unexpected “black swan.” As a result, gold and silver have started to rebound.
This rebound has conditions that could allow it to continue. But how far it can go depends on whether next week the leaders of the U.S. and Iran will meet and whether the Middle East situation can truly calm down—those are the key variables driving what happens next.
At next week’s UN General Assembly, Iran’s president and foreign minister have already obtained visas to travel to the United States. It will come down to whether Trump and his team will sit down and talk. $XAU $XAG