Noor Capital | Mohammad Hashad Interview on Dubai TV – December 11, 2023

Amidst high inflation readings, asked about the most likely scenarios regarding the upcoming decisions by major central banks during the current trading week, and whether there be any interest rate cuts or unchanged rates, Mohammed Hashad, the Head of the Research and Development Department at Noor Capital and member of the US Association of Technical Analysts, said in an interview on Dubai TV that the answer to this question would largely depend on inflation figures.

BoE, Fed, ECB Policy Meetings

So far, expectations indicate the possibility of inflation rates slowing to about 3.1%, but Hashad expects the core inflation rate to stabilize at 4%, which will have an obvious impact on the looming central banks’ decisions.

As for the Federal Reserve, Hashad expects that interest rates will remain unchanged, but the focus must be on the Federal Reserve Committee’s statement and any hints regarding the Fed’s ability in the future to raise interest rates or otherwise.

Regarding the Bank of England’s policy decision, Hashad believes that the UK central bank will keep interest rates at 5.25%, especially since the UK economy has been greatly impacted by high interest rates.

Regarding the European Central Bank’s decision and Christine Lagarde’s press statement, Hashad believes that the most likely scenario is that the European Central Bank will leave the interest rate decision unchanged at this meeting at the 4.5% level.

Gold Prices

Commenting on the performance of gold prices, which recorded their lowest levels in two weeks, and asked why the precious metal gave up its earlier gains and whether it could continue to decline; Hashad explained that gold moved away from its recent gains, that took place after hitting the $2150 per ounce level, with prices now settling around 1,991, which is its lowest level in two weeks, with its weekly losses exceeding approximately 1.5%.

Hashad added that gold was negatively affected by the rise of the US dollar after the positive data that was released last week, which reinforced the idea that the Fed may think a lot before finalizing the monetary tightening cycle.

Labour market data in the United States was also positive and better than expectations, as it indicated that the US economy added 190,000 jobs, in addition to a decline in unemployment rates to 3.7%. Gold was also impacted, and even pressured by the rise in Treasury bond yields, which the investor now sees as a guaranteed security that gives a greater returns compared to gold.

Hashad reported that gold will continue its downward trend this week towards $1977 and even $1944 per ounce.

US Stocks

Speaking of the US stocks that continued to achieve gains, and asked what the reasons that supported that surge, Hashad said that US markets benefited greatly from several factors and touched their highest level in six weeks.

US stocks benefited from the rise in risk appetite, which was evident in the VIX index, measuring stock market volatility, which recorded its lowest level in several weeks at 2.22%. This is evidenced that investors’ fears have receded.

In addition, there was optimism about the strength of economic activity in the US, which grew by about 5.25%, better than expectations, in addition to the rise in some stocks listed on the Nasdaq Stock Exchange in the technology sector; Alphabet and Procter & Gamble, as well as gains in the crude oil and natural gas sectors.

Crude Oil

Regarding crude oil, and its price movements that were positive, and why after prices had risen, those gains quickly diminished, Hashad answered that oil prices moved away from their lowest levels in six months and abandoned their lowest levels, which was the longest series of losses since 2018.

According to Hashad, the general trend, for crude oil, is still bearish as there are fears of a glut in supply, but there is some positive news indicating that the United States is seeking to refill the nation’s strategic oil reserves by 3000000 barrels. Oil also benefited from the recent voluntary output cut plan by 2.2 million barrels up to the 2024’s Q1 in addition to the decline of strategic stockpiles as indicated by the International Energy Agency last week.