Overnight, the Federal Reserve emphasized that the U.S. economy is strong and reiterated its expectations for interest rate hikes, putting pressure on spot gold. On Thursday, the U.S. dollar soared, breaking through the 95 mark soon.

Overnight, the Federal Reserve emphasized that the U.S. economy is strong and reiterated the Fed's interest rate hike expectations, putting pressure on spot gold. On Thursday (August 2), the US dollar soared and broke through the 95 mark. The spot gold price opened at US$1,216.05 per ounce. It rebounded slightly at the beginning of the Asian market and hit an intraday high of US$1,221.15 per ounce. It then fluctuated downward and the increase narrowed.

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After the Federal Reserve meeting, the market will also welcome the Bank of England meeting tonight and the initial jobless claims in the United States for the week to July 28 Number of people, U.S. non-farm payroll data for July will also be released on Friday, and the gold market may experience significant fluctuations.

Global gold demand plummeted to the lowest level in nearly 10 years

The suppressed gold bulls received bad news again. In the first half of this year, investors were less interested in buying gold due to the strong pressure of the US dollar, and gold demand fell to the lowest level in the past 10 years.

According to the verse released by the World Gold Council , gold demand fell 6% year-on-year to 1,960 tons in the first six months of this year. Among them, the slowdown in capital inflows of gold-backed exchange-traded funds (ETF) was one of the reasons for the decrease in demand. one.

data shows that in the second quarter, global gold consumption fell by 4% to 964 tons, and investment demand fell by 9%. According to the gold demand trend report for the second quarter of 2018 released by the World Gold Council on Thursday (August 2), gold demand remained weak in the second quarter, with the total volume falling to 964.3 tons. In terms of the total level of 1,959.9 tons in the first half of the year, it is also the lowest level since 2009.

Gold jewelry demand fell by 2% in the second quarter to 510.3 tons, mainly due to the weakening Indian market. Central bank buying has also tended to slow. The

report pointed out that the gold ETF changed from a large increase in holdings in 2016/17 to a sustained small change. Inflows fell by 46% year-on-year. European-listed gold ETFs have seen considerable inflows amid uncertainty over the Italian election and monetary policy outlook. However, in comparison, the total number of North American ETF holdings decreased by 30.6 tons, mainly due to investors paying more attention to the strong growth of the domestic economy in the United States. But U.S. gold ETFs suffered outflows, a trend that partially offset "very good inflows" into European ETFs during the quarter.

Labor Department “spoilers” ahead of Friday’s non-farm payrolls?

The United States will release the highly anticipated July non-agricultural report at 20:30 this Friday evening. In addition to the number of new jobs and the unemployment rate, the market continues to pay attention to the wage inflation data in the United States, because the unexpected performance of this data in the past few reports has triggered a big market. Before the non-farm payrolls announcement, a report released by the U.S. Department of Labor seemed to reveal some clues in advance.

Data released by the U.S. Department of Labor this week showed that the U.S. employment cost index rose 2.8% year-on-year in the second quarter, the largest single-quarter increase since the third quarter of 2008. In addition, wages and salaries increased by 2.8% year-on-year, the largest increase since the third quarter of 2008; welfare costs increased by 2.9% year-on-year, reaching a new high since the fourth quarter of 2011.

reported that the demand for labor in the manufacturing, construction and service industries has increased significantly. Due to the ongoing shortage of qualified workers, employers are offering workers better compensation packages. Average hourly wages in the private sector have moved monthly with employment changes across industries, and hours worked have increased as the job market has become stronger.

Notably, the employment cost index has hovered around 2% since the Federal Reserve kept interest rates low. The market has been worried about the delay in wage growth picking up, which has become the main focus of the monthly non-farm payrolls report. Economists expect the average hourly monthly rate and annual rate in the United States to record 0.3% and 2.7% respectively in July.

Capital Economics pointed out in the report that as the labor shortage becomes increasingly scarce, upward pressure on wages will further push up inflation in the second half of this year.

Canadian Imperial Bank of Commerce Capital Markets Economist Katherine Judge believes that the increase in labor participation rate in June shows that the job market still has more idle space to digest, which will alleviate everyone's concerns about labor shortages.However, if the labor force participation rate falls, this should cause the unemployment rate to fall by 0.2 percentage points to 3.8%

Analyst Views

Technical Analysis Godfather Daryl Guppy wrote on Wednesday that traders need to Pay close attention to the next trend of gold prices. Spot gold is currently approaching the strong historical support level of 1210 and traders need to prepare for a potential rebound. However, if there is no rebound from this level, the task of identifying a trend rebound will become more difficult.

Tai Wong, head of base metals and precious metals trading at BMO Capital Markets, said, "Gold prices continue to hover near recent lows after the Federal Reserve's August statement gave no indication of when the committee would deviate from its strategy of expected to raise interest rates by one yard per quarter. Therefore, bulls The intensifying trade war on all fronts will continue to support the U.S. dollar, clouding the outlook for U.S. dollar-denominated commodities such as gold for the rest of the summer. "

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