U.S. Banks Face Dual Challenges: Weakening Loan Quality and Declining Interest Payments

Major U.S. banks are expected to report lower second-quarter profits due to decreased interest income and increased provisions for potential loan losses. Analysts anticipate higher risks associated with commercial and industrial (C&I) loans and commercial real estate loans, reflecting a normalization of the credit cycle. The Federal Reserve's stress test indicates C&I loan loss rates could rise to 8.1% from 6.7% last year. However, the outlook isn't entirely gloomy, as Wall Street divisions may see improved performance due to a 20% increase in global merger and acquisition volumes and a 10% rise in equity capital market volumes in the first half of the year.

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Gold's Summer Slump? Market Experts See Sideways Trading Before Potential Upswing

The gold market is currently experiencing choppy behavior, trading within a large consolidation area. Despite initial gains on Tuesday, the market showed signs of hesitation. Analysts expect continued fluctuations as the market seeks to find value, with potential for further short-term drops. However, long-term bullish factors remain, including central bank purchases, potential global interest rate cuts, and ongoing geopolitical concerns. Technical analysis indicates support levels at the 50-day EMA near $2,320 and a major support at $2,300, with further support at the 200-day EMA around $2,200. Given these factors, the overall outlook for gold remains positive, although the market may continue to move sideways in the near term, particularly during the summer months.

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Gold Inches Higher as Markets Await Powell's Testimony and Inflation Data

Gold prices edged up slightly on Tuesday as investors await Federal Reserve Chair Jerome Powell's testimony to Congress and the upcoming U.S. June inflation data for insights into future interest rate decisions. The market is particularly sensitive to any unexpected dovish comments from Powell, which could push gold closer to $2,400 per ounce. However, persistent inflation could lead to a reversal of recent gains. Current market expectations, influenced by rising unemployment rates, suggest a high probability of a rate cut in September, with another expected by December. These factors continue to be the primary drivers of gold prices in the short term.

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Equity Rally and Profit-Taking Lead to 1% Drop in Gold Prices

Gold prices dropped over 1% on Monday due to increased risk appetite in the equity markets and profit-taking by investors following a sharp rally. Spot gold fell to $2,357.88 per ounce, while U.S. gold futures settled at $2,363.50. The decline comes after gold reached its highest level since May 22 on Friday, driven by expectations of potential interest rate cuts by the U.S. Federal Reserve in September. Bob Haberkorn, a senior market strategist at RJO Futures, attributed the drop to profit-taking and strong performance in equities, which hit record highs. Despite the current dip, Haberkorn anticipates higher gold prices based on predictions of further Fed rate cuts later in the year.

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