Abstract: Xu Yaxin, chief strategist of Hongze Capital, told the reporter of " China Times " that this wave of rise in gold prices is not the medium- and long-term entry of funds. More driving factors come from the technical rebound caused by the previous technical rebound caused by the funds shorting of and the short ; a technical rebound does not mean a reversal.
China Times (www.chinatimes.net.cn) reporter Ye Qing Beijing report
During this year's National Day holiday, the prices of commodity generally rose, among which the prices of international crude oil, palm oil , and non-ferrous metal surged. From October 3 to 7, the price of crude oil in the United States increased by 16.48%, the price of Brent crude oil in the United States increased by 15.05%, the price of fuel futures in the United States rose by 24%, the price of MA palm oil rose by 12.38%, the lead in London rose by 8.18%, the aluminum in London rose by 6.77%, and the nickel in London rose by 4.71%.
It is worth noting that due to the decision to reduce production by OPEC (OPEC ), international oil prices have experienced five consecutive increases, and have also achieved the largest single-week increase in seven months. As of the closing in the early morning of October 8, Beijing time, US WTI November crude oil futures closed up 4.74% to US$92.64/barrel, and Brent 2 December crude oil futures closed up 2.7% to US$97.92/barrel.
The conflict between Russia and Ukraine is becoming increasingly complex, and continues to affect the trend of commodity markets such as crude oil. On October 8, according to the Russian Satellite News Agency, the Russian National Counter-Terrorism Commission issued a statement revealing details of the fire on the Crimea Bridge that day, saying that the truck explosion caused the train tanks on the bridge to be ignited. According to the Ukrainian Independent News Agency, an adviser to the Ukrainian Presidential Office said that the Crimea Bridge incident was just a "start".
is affected by factors such as the expectation of the Federal Reserve's interest rate hike remain unchanged, and the international gold price of has increased by about 2% this week.
"Gold is just a technical rebound and has not reversed yet"
On October 7th local time, The U.S. Bureau of Labor Statistics (Bureau of Labor Statistics) released the latest non-farm employment report, showing that the number of non-farm employment in the United States increased by 263,000 in September, the smallest increase since April 2021, with the market expectation to increase by 250,000 and 315,000 in August; the unemployment rate in September was 3.5%, the market expectation was 3.7%, and the previous value was 3.7%.
federal funds rate futures show that the probability of the Federal Reserve hike rate hike 50 basis points to the range of 3.50%-3.75% in November is 25.7%, the probability of raising interest rates by 75 basis points is 74.3%, and the probability of raising interest rates by 100 basis points is 0%; the probability of raising interest rates by December is 20.2%, the probability of raising interest rates by 125 basis points is 59.1%, and the probability of raising interest rates by 150 basis points is 20.7%.
From the above data, the market generally expects the Federal Reserve to continue hike interest rates and will raise interest rates by another 75 basis points in November. After the employment data was released, traders expected the Federal Reserve to raise interest rates by another 50 basis points in December, raising the federal funds rate by 4.25%-4.5%. It is reported that after the release of US non-farm data, spot gold fell below the $1,700/ounce mark. Since the release of non-farm data, it has fallen by nearly $20 and finally closed at $1,701/ounce, down more than 1% during the day.
At the same time, after the non-farm data was released, Fed officials also made remarks one after another. Fed Evans said: Inflation is very high now, which is the Fed's most concerned issue; further interest rates are needed, and it is moving towards the 4.5%-4.75% interest rate rate, which is likely to reach next spring; the Fed will discuss whether to raise interest rates by 50 basis points or 75 basis points at its next meeting.
Fed official Mestre also said that the Fed should consider selling housing mortgage-backed securities at some point; the Fed will use its own tools to achieve inflation targets without tightening fiscal policy; the Fed is not expected to cut interest rates next year.
According to the reporter, during the National Day holiday, the dollar index and US Treasury yields both fell at high levels, precious metal bottomed out and rebounded, and the spot gold price continued to rise after breaking through the key points of $1675-1680/ounce, and once rose to a high of $1730/ounce. However, after the non-agricultural data was released, the spot gold price converged, which rose by nearly 2% compared with the price of 15:1672 per ounce on September 30.
Chief strategist of Hongze Capital told the reporter of the China Times that the rise in gold prices on October 3 and 4 is related to the change in sentiment in the entire financial market, especially the 10-year US bond yield fell from a high of 4% to 3.5%, providing support for the rebound of gold prices.
"From the fundamental point of view, it is because the British government abandoned the original tax cut plan and entered the bond market to intervene, greatly alleviating the spread of market panic, causing the pound pound exchange rate to stabilize and rebound, and also pushing the US dollar index to get out of the 20-year high of 114.78, providing support for the rebound of gold prices. At the same time, the US September ISM manufacturing index released on October 3 hit a new low since May 2020, and the new order index fell to 47.1 month-on-month, falling to the level at the beginning of the outbreak of the new crown epidemic, and fell into the contraction range, suggesting that the interest rate hike started by the Federal Reserve this year has begun to weaken the demand side, which has also driven the decline in US bond yields and pushed the gold price to rebound." Xu Yaxin said.
However, Xu Yaxin said that from a technical perspective, the gold price has been around since the outbreak of the Russian-Ukrainian crisis at the beginning of the year and hit a high of US$2,070/ounce, from early March to the end of September, and the cumulative decline of 21.91% in the range has reached a maximum of 21.91%. After approaching the psychological threshold of US$1,600/ounce, the short opponents are close to the market, which has triggered a large-scale short rebound to .
"In other words, this wave of rise in gold prices is not the medium- and long-term long-term entry of funds. More driving factors come from the technical rebound caused by the previous short-selling funds being profit-taking. Technical rebound does not mean a reversal. Looking ahead to the future market, we see that the latest September non-agricultural data released is better than expected, but the market will now regard good data as bad news, that is, the strong data will make the Federal Reserve continue to raise interest rates significantly in November, which will promote the market's selling. This means that the gold price still has the possibility of being tested again at the psychological threshold of $1,600/ounce." Xu Yaxin said.
JP Morgan Chase predicts the fourth quarter oil price trend
In addition to the large fluctuations in gold prices, international oil prices have experienced five consecutive increases this week due to the tight supply of crude oil market and the decision to reduce production by OPEC+. Among them, New York oil prices rose by 16.54% in cumulatively, and Brent oil prices rose by 11.32%, both of which hit the week of March 4 this year, which is the largest single-week increase in seven months.
According to CCTV News, on October 5, local time, the 33rd Ministerial Meeting of the Organization of Petroleum Exporting Countries, , and the Organization of Petroleum Exporting Countries, and the 33rd Ministerial Meeting of the "OPEC+" composed of non-OPEC oil-producing countries was held in Vienna, Austria. The meeting decided that starting from November 2022, OPEC and "OPEC+" participating countries will reduce the average daily oil output by 2 million barrels (2mb/d).
OPEC+ also announced that it would adjust the frequency of the meetings of the Ministerial Supervision Committee (JMMC) from once a month to once every two months, and the next OPEC and non-OPEC national ministerial meeting will be held on December 4 this year. This production cut will be the largest since the epidemic, accounting for more than 1% of global supply. Affected by this, international oil prices have risen again, and overseas investors' concerns about inflation have also intensified.
After OPEC+ production cuts, President Biden called on the U.S. government and Congress to explore ways to increase U.S. energy production and reduce OPEC's control over energy prices, and warned that oil will continue to be released from the national strategic oil reserves "if necessary". Data shows that the United States has sold more than 10 million barrels of strategic oil reserves to eight companies, including Marathon and Equinor.
's sale is part of Biden's previously announced plan to sell 180 million barrels of reserves. Delivery will begin in November, after the government's strategic oil reserves were 155 million barrels, and now it raises its target to 165 million barrels.Zhong Meiyan, director of Energy and Chemical of Everbright Futures, told the China Times reporter that the differences between Saudi Arabia and the United States intensified, and OPEC+ increased production cuts caused strong opposition and accusations from the United States. It can be foreseen that the subsequent energy game will be more intense. After the United States released a large number of strategic oil reserves in the early stage, its marginal influence will also decline significantly; the market's concerns about the supply side have resurged, which is the core logic of the market's oil price increase.
According to the OPEC+ production agreement, the benchmark for production cuts is the output in August 2022, of which OPEC+'s production in August was 43.856 million barrels per day, and the target production in November and December was 41.856 million barrels per day, of which the 10 OPEC member countries had a production cut quota of 1.273 million barrels per day, and non-OPEC member countries had a production cut of 727,000 barrels per day.
It is understood that among OPEC member countries, Saudi Arabia's production cut quota was 526,000 barrels per day, followed by Iraq at 220,000 barrels per day, UAE 160,000 barrels per day, and Kuwait at 135,000 barrels per day. Russia cuts production by 526,000 barrels per day among non-OPEC members. Based on the fragile balance of current market supply, OPEC+'s transition from a previous slight production cut to a significant production cut has supported the bottom of oil prices.
Zhong Meiyan said that as the fourth quarter, the geopolitical situation will continue to tug-of-warm, and the structural energy crisis in the heating season has not been lifted. OPEC+ uses production cuts to support oil prices, and will become the main theme of the fourth quarter; in the context of Saudi Arabia and Russia taking the lead in reducing production, the market will continue to tug-of-warm; the contradiction of supply concerns has overcome the concerns of decline in demand in stages, and the oil price trend is relatively strong.
geopolitical conflicts continue to stir the nerves of the market. According to multiple Russian media reports, in the early morning of October 8 local time, on the railway of the Crimea Bridge across the Kerch Strait, a fuel-loaded train oil tanker carriage caught fire, and many freight cars were damaged, railway and road traffic on the bridge was temporarily interrupted, and shipping on the Kerch Strait was normal. The accident rescue investigation has begun.
In terms of the impact of geopolitical conflicts, Zhong Meiyan said that the core elements in the fourth quarter are still paying attention to the comprehensive impact of the two main lines of geopolitical conflicts and the Federal Reserve's interest rate hikes on the economy. Once sanctions continue to be increased and geopolitical conflicts intensify, oil prices may once again sprint to a high of US$120 per barrel.
For the short-term future market, Zhong Meiyan said that it is expected that oil prices will open sharply higher after the holiday, and the futures price of the main SC contract is expected to be around 700 yuan/barrel, but the momentum of subsequent upward trend is expected to weaken. We need to pay attention to the pressure faced by Bergail at the integer mark of US$100/barrel.
JPMorgan also pointed out in its latest report that oil prices will retest $100 per barrel in the fourth quarter. But to get oil prices to this level, five things need to be done: oil demand increases by 900,000 barrels per day year-on-year, Saudi Arabia needs to normalize production to below the current level of 11 million barrels per day, the United States' plan to release its strategic oil reserves needs to end in October or earlier, the US dollar needs to stabilize, and sanctions on Russia force Russia's oil production to reduce by 600,000 barrels per day.
JPMorgan said that at present, traditional opposition to Russia's massive production cuts seems to be offset by the challenges facing the country's oil production due to Western sanctions; Russia's tanker capacity is short of at least 1 million barrels per day, and production is expected to drop by 600,000 barrels per day from September's level; in addition, if OPEC+ sharply cuts production, it may trigger the United States to take countermeasures in the form of releasing war reserves.
