US: White House Press Conference Underway Shortly

• Spot gold prices are consolidating a bounce from multi-month lows following with the announcement of the US-Iran deal and the key June FOMC meeting closely coinciding, suggesting the current juncture could represent an inflection point for spot prices, setting the tone for a medium-term trend.
• Recall a core driver of the acceleration in bearish price action in June had been hawkish developments in US short-term rates, as the US labour market appears solid and inflation has picked up - meaning the market firmed expectations for the next FOMC move to be a hike rather than a cut. This decisively undercut the previous "debasement trade" narrative of increasingly loose policy.
• A Hormuz reopening, translating to lower energy prices, now closely coincides with tomorrow's FOMC decision, with the meeting one of the most anticipated in years as new Chair Warsh may be laying out his reform agenda.
• This combination may represent the most conceivable recent backdrop for a potential turnaround higher in gold: A dovish tilt from Warsh may prompt the "debasement trade" picking up again, yielding a shift in sentiment. Participants could then also focus back on other structural drivers of the gold price, including central bank accumulation and investor concerns around unsustainable sovereign debt levels. January highs stand at $5595.5/oz.
• However, should these developments not provide bullish impetus, key potential catalysts for higher prices could then fade, meaning notable medium-term supports could come back under threat. The pullback cluster of lows from last October (sitting at $3887/oz) closely coincides with the 20-month EMA, a key support.

• RES 4: 1.1797 High May 06 
• RES 3: 1.1681 Top of a bear channel drawn from the Apr 17 high
• RES 2: 1.1686 High May 29
• RES 1: 1.1638 50-day EMA
• PRICE: 1.1603 @ 16:16 BST Jun 16
• SUP 1: 1.1557/1500 Low Jun 12 / 08
• SUP 2: 1.1443 Low Mar 30
• SUP 3: 1.1411 Low Mar 13 and 16 and a key M/T support
• SUP 4: 1.1373 1.764 proj of the Jan 27 - Feb 6 - 10 price swing 

Short-term gains in EURUSD appear to be corrective for now. Resistance to watch is 1.1638, the 50-day EMA, and 1.1686, the May 29 high. A clear break of the 50-day average would highlight a bullish development and a possible reversal. This would expose 1.1681, the top of a bear channel drawn from the Apr 17 high. Key short-term support has been defined at 1.1500, the Jun 8 low. Clearance of this support would confirm a resumption of the bear cycle.

Rates saw a noteworthy rise Monday, including both SOFR and unusually Fed funds. 

• SOFR (alongside other secured rates) jumped 4bp Monday, to 3.69%. This upward move was on the high side but not entirely unexpected, coming as it does alongside the key mid-June corporate tax date as well as $79B in net Treasury auction settlements. Both sources of pressure should ease Tuesday, with the tax date behind us and net Treasury settlements returning $20.6B to market.
• Meanwhile against that backdrop, the effective Fed funds rate rose 1bp to 3.63%, the highest it has been within the target 3.50-3.75% range since May 18.
• The pickup in the effective rate means EFFR has moved from 12bp above SOFR in mid-May (which had been the widest since September 2022), to 6bp below.
• The decline in SOFR in May had led to talk that the Fed could slow reserve management purchases or stop them altogether, but they re-upped at $10B/month for another month, and the apparent pickup in rates to more normal levels could assuage concerns that conditions had gotten too soft.

REPO REFERENCE RATES (rate, change from prev. day, volume):
* Secured Overnight Financing Rate (SOFR): 3.69%, 0.04%, $3147B
* Broad General Collateral Rate (BGCR): 3.67%, 0.04%, $1297B
* Tri-Party General Collateral Rate (TGCR): 3.67%, 0.04%, $1267B
 

New York Fed EFFR for prior session (rate, chg from prev day):
* Daily Effective Fed Funds Rate: 3.63%, 0.01%, volume:  $102B
* Daily Overnight Bank Funding Rate: 3.63%, 0.01%, volume:  $196B