On Monday (October 10), spot gold fluctuated slightly during the Asian session. It is currently trading around $1,692 per ounce. Last Friday, the US non-farm employment report in September was better than market expectations, strengthening the expectation that the Federal Reserve will raise interest rates significantly. The yields of the US dollar and US bonds rose sharply and recorded three consecutive positives, causing the gold price to weaken sharply. However, the gold price is still supported by concerns about the regional situation and global economic recession. "The market believes that the stronger-than-expected non-farm employment report further pushed the Fed to raise interest rates by 75 basis points again at its meeting in early November. If gold prices cannot hold the support level of $1,690, it may retest the $1,660 level. The market will now focus on key U.S. inflation data, as well as the Federal Reserve's meeting minutes."
Currently, the market expects U.S. inflation to slow down in September, but core inflation will remain high, and investors need to pay attention to changes in market expectations; the U.S. September CPI data will be released on Thursday (October 13). In addition, investors need to pay attention to further speeches by Federal Reserve officials and related news about the geopolitical situation in Russia and Ukraine, and pay attention to the "terrorist data" released on Friday (October 14) - US retail sales data.
technically, before losing the 10-day moving average of 1685.52 ( Bollinger Band mid-track support is also near this position), the daily line level still has the possibility of a "head and shoulders bottom" bottom signal, and the bulls still have the opportunity to regain the upward trend; but if the 10-day moving average breaks, it will increase the bearish signal in the future.
fundamentals are mainly negative
[The US non-farm job growth rate in September exceeded expectations, and the employment market is still resilient under the fierce interest rate hike]
US employment growth slowed moderately in September, while the unemployment rate fell to 3.5% , which shows that the labor market is tight and will allow the Federal Reserve to maintain its radical monetary policy tightening path for some time.
Although the unemployment rate fell from 3.7% in August, partly because people left the labor market, the closely watched job report released by the Department of Labor on Friday (October 7) showed that fewer Americans were working part-time jobs last month due to economic reasons. The labor market has shown resilience despite the Fed's violent rate hikes slowing demand. "The labor market remains hot, and the super-tight employment situation is generating growth in wages and nominal income, which is not commensurate with bringing inflation back to a more acceptable level." The
survey showed that after 315,000 jobs were added in August, non-farm jobs increased by 263,000 last month. While this is the lowest since April 2021, employment growth exceeded the monthly average of 167,000 in the 2010s. Since the beginning of this year, the average monthly increase of 420,000 jobs has increased by 420,000.
Economists have predicted 250,000 new jobs, with an estimated value ranging from as low as 127,000 to as high as 375,000. The unemployment rate is considered to be flat at 3.7%.
US President Biden said the increase in jobs is "an encouraging sign that we are transitioning to stable and sustained growth."
Employment Report shows that despite the shrinking GDP in the first half of the year, the economy has not fallen into recession. However, as the Fed increases its crackdown on inflation, the risk of an economic downturn is increasing next year.
The Fed has raised its policy rate from near zero at the beginning of this year to the current range of 3.00% to 3.25%. Thursday’s September consumer price report will help policy makers assess their progress in curbing inflation ahead of a policy meeting on November 1-2.
The widespread growth in employment last month was driven by the leisure and hospitality industry, which saw 83,000 jobs increase. Most of the growth is in restaurants and bars. Despite this, the leisure and hospitality industry still has 1.1 million jobs below the pre-pandemic level.
"The economy did not fall into recession in the first half of 2022, nor did it fall into recession in the third quarter," said Brian Bethune, a professor of economics at Boston College. “However, those recession forecasters are just constantly pushing their recession dates into the future."
Labor force participation rate, i.e. the percentage of Americans of appropriate age who have jobs or are looking for jobs, fell from 62.4% in August to 62.3%. It was 1.1 percentage points lower than the February 2020 level.
Wage growth remains solid as the labor market remains tight. The average hourly wage increased by 0.3%, similar to the increase in August. This reduced the annual wage increase in wages from 5.2% in August to 5.0%. The average weekly working hours remained at 34.5 hours for the fourth consecutive month despite income Growth has slowed from its peak of 5.6% in March, but the Atlanta Fed’s wage tracking tool believes that the current wage growth rate is 6.7%. From any perspective, current wage growth is inconsistent with the Fed’s 2.0% inflation target.
“From a growth perspective, the good news is that the strength of the labor market keeps the total household wages positive, even considering the rising inflation rate,” said Eric Winograd, senior economist at Alliance Bernstein, New York. “This is an important argument that supports a soft landing of the economy, or at least a soft landing, is still possible. "
[Feder Williams reiterates the need for further rate hikes to reduce inflation]
New York Fed Chairman Williams said last Friday that the Fed has more work to do in reducing inflation and rebalancing economic activities in a more sustainable way, and he also warned that the unemployment rate is likely to climb in the process.
"We need to raise interest rates further, basically letting interest rates above inflation levels," Williams said in an event. "This will help limit demand and supply and drive inflation back rapidly in the process. "
Williams is also the vice chairman of the Federal Open Market Committee (FOMC). Williams said the U.S. economy has "a very strong labor market, which is a good thing, except that inflation is very high," the Fed is raising interest rates to fight inflation. In the future, he added, "you're likely to see the labor market, you know, in terms of job growth, maybe not as strong as before. "
He added that the economy is slowing down at the moment, especially the property market. But he said he does not think the economy will shrink as the financial market is generally concerned.
Williams said: "I do think there will be positive growth next year, I think the unemployment rate will climb, but most importantly, I think inflation will drop significantly next year." ”
[ dollar index three consecutive positives hit a new high]
dollar strengthened against major currencies last Friday, hitting a high of 112.88, closing at 112.77, an increase of about 0.46%, the third consecutive trading day rose. On Monday (October 10), the US dollar index once surged to 112.94, a new high since September 30. Previously, U.S. data showed that employers hired more workers in September As expected, this suggests that the Fed may stick to its aggressive austerity policy at the moment.
Chief currency analyst Adam Button of Toronto ForexLive said, “Any sign of weak U.S. economy will put a lot of pressure on the dollar, but the non-farm data certainly does not drag down the dollar,”
However, it should be noted that at the daily level, the U.S. dollar index hit a nearly 20-year high of 114.79 on September 28. The top signal of the recently formed " Dusk Star " has not been destroyed, and we still need to be wary of the possibility of the US dollar index returning to the decline.
[ US bond yield daily positive for three consecutive days, ten consecutive days of positive for the week]
US 10-year Treasury bond yield rose 1.6% last Friday, the third consecutive trading day, with a high of 3.910%, a new high since September 29, and a weekly increase of 2 .13%, the 10th consecutive week of closing, the longest continuous rise since 1994, suggesting that the opportunity cost of holding gold is increasing and also hitting gold bullish morale.
The Fed's expectation of a 75 basis point hike rate increases after the non-farm data released last Friday, as federal funds rate futures suggest that the likelihood of raising policy rates to the 3.75% to 4% range at a November meeting was as high as 92%, higher than the 85% before the data was released.
Sameer Samana, senior global market strategist at Wells Fargo Investment Institute in Charlotte, North Carolina, said, "There may be some people who want a weaker number that can create conditions for the Fed's turn. I believe they are disappointed. The 'Fed will turn and stop' thing we've gone through enough, and hope that given the Fed's comments, there will be no more bets on this. You can say that hope is eternal, but it's broken again."
[Speculators' bearish bets on long-term US Treasury bonds have increased to the most in more than a year]
According to data released by Commodity Futures Trading Commission (CFTCh) on Friday, the bearish bets on long-term US Treasury bonds have increased to the most in more than a year.
As of the week ended October 4, the net short contracts held by speculators in the United States long-term bonds futures increased to 103,523, the most since September 2021. This means that the market is still constantly bullish on U.S. Treasury yields.
fundamentals are mainly good for
[Traffic recovery after the explosion of the Crimea Bridge, Putin ordered the strengthening of security]
Last Saturday (October 8), a powerful explosion caused damage to the dual-purpose bridge of Russia's road and railway to Crimea. Russia did not immediately accuse anyone of the explosion, and Ukrainian officials did not claim to be responsible for it.
Kerch Strait Bridge is a symbol of Moscow annexation of Crimean Peninsula, and is also a key route to provide supplies to the Russian army fighting in Wunan.
Russian President Putin signed a presidential decree directing strengthening security for the Crimea Bridge and infrastructure that supplies electricity and natural gas to the peninsula. He also ordered a committee to be established to investigate the bombing.
Russian officials said the explosion killed three people, possibly a passenger in a car driving near the explosion truck. On the upper railway bridge, a seven-chain tanker of a freight train heading to the peninsula also caught fire.
About 10 hours later, road and bridge traffic resumed limited access, and the Ministry of Transport also approved railway transportation to resume later.
It is not clear whether the explosion was a deliberate attack, but the destruction of such a striking infrastructure could further undermine the war’s assurance that the war is going on as planned.
Putin celebrated his 70th birthday last Friday and did not celebrate with great fanfare, as further signs that his invasion of several key areas of Ukraine were retreating and triggered unprecedented criticism at home
Ukrainian President Zelensky did not mention the bridge bombing in his video speech on Saturday, but said that the weather in Crimea was cloudy.
[Putin accuses Ukraine of planning the Crimea Bridge bombing, saying it was terrorism]
Russian President Putin accused Ukraine of planning last Sunday (October 9) that the explosion last Saturday destroyed an important bridge connecting Russia and Crimea, saying it was an "act of terrorism."
Putin said in a video, "There is no doubt. This is an act of terrorism aimed at destroying vital civil infrastructure. This is planned, implemented and ordered by the Ukrainian agent department."
The statement made by Putin came after Russia launched an missile attack on Sunday morning, hitting an apartment and other residential buildings in the southeastern Ukraine city of Zaporoze. Ukrainian officials said at least 13 people were killed and 89 were injured. The air strike was the second similar attack on the city in three days.
Putin met with Russian Commission of Inquiry, Bastkin, who submitted to Putin the findings of an investigation into an explosion in a truck last Saturday and subsequent fire on the Crimea Bridge.
Bastkin said in an interview that investigators have determined the route of the explosive vehicle and the personnel involved. Before arriving at the bridge, the car passed through Bulgaria , Georgia , Armenia , South Ossetia and Krasnodar region in Russia.
The White House did not make a direct comment on the Crimea Bridge bombing last Sunday, but said the United States will continue to provide military aid to Ukraine.
[Russian Federal Security Bureau said that the number of fires by Ukraine on Russian territory has increased significantly in the past week, causing one death and five people including one child injured.
The Russian Federation Security Agency, which is responsible for border security, issued a statement on Sunday saying that the locations attacked by Ukrainian troops were concentrated in the Belgorod area near the Ukrainian city of Kharkov , as well as the Bryansk and Kursk. The Russian Federal Security Agency said that more than 100 attacks have been reported in 32 regions in the past week. The weapons used by the Ukrainian army include multi-barrel rocket launcher , artillery weapons, mortar and drones. In addition to causing casualties, the Ukrainian army also destroyed two local power stations, 11 residential buildings and two administrative buildings.
[Speculators' net long positions in the past week fell to their lowest since mid-March]
According to data released by Reuters and the U.S. Commodity Futures Trading Commission (CFTC) last Friday, the net long bets held by speculators in the past week fell to their lowest since mid-March.
As of the week ending October 4, the net long position of the US dollar fell from US$10.43 billion in the previous week to US$9.44 billion. This reflects a decline in institutions' bullish willingness to the US dollar.
[U.S. stock market closed sharply lower]
US stock market fell sharply last Friday. The previously released US September employment report was good, increasing the possibility that the Federal Reserve will continue to firmly push forward interest rate hikes, and many investors are worried that this will push the US economy into a recession.
GW; KInvestmentManagement Global strategist Bill Sterling said the data consolidated expectations of another 75 basis points rate hike in November. "The labor market is still too hot for the Fed's comfort zone. This is a typical example of bad news. The market received the good news of a strong job market report and instead interpreted it as the Fed will be more alert, so there may be a higher risk of recession next year."
An economist said the Fed should not be assured of tight labor markets because it will be fast when unemployment starts to rise, which is a leading indicator of recession.
"We haven't felt the full impact of austerity policies yet," said Joseph La Vorgna, chief U.S. economist at SMBC Nikko Securities. "They will continue until the eventual reversal, and when it comes to a reversal, you will not be able to slow down this momentum." As of the closing of
, Dow Jones Industrial Average closed down 630.15 points, or 2.11%, to 29296.79 points; S&P 500 fell 104.86 points, or 2.80%, to 3639.66 points; Nasdaq fell 420.91 points, or 3.8%, to 10652.41 points.
future market prospects
survey shows that professionals and ordinary retail investors have big differences in their views on the future market.
Last week, a total of 19 market professionals participated in KitcoNews' Wall Street survey. Among them, 11 analysts (58%) were bearish on gold prices, 5 analysts (26%) were optimistic about the short-term prospects of gold, and 3 analysts (16%) said they had a neutral view on gold in the short term.
Retail investors, 790 respondents participated in the online survey. A total of 451 respondents (57%) expect gold prices to rise, another 222 (28%) predict gold prices to fall, and the remaining 117 (15%) expect gold prices to consolidate sideways.
ABCBullion Global General Manager Nicholas Frappell said he is bearish on gold prices in the short term because the recent rise has not attracted new bullish momentum. " (from September 27 to October 5), the total open contracts on the Chicago Mercantile Exchange fell by about 2.4 million ounces, considering the recent price movement, which suggests that the rise is more driven by short cover than new longs. Overall, I think the Fed's path to tightening policy remains strong.”
However, AdrianDay, president of AdrianDay, said he believes gold prices will not weaken in the short term. "The economy is turning negative, and the global economy is being hurt by the strong dollar." At some point, something will collapse, the dollar will fall, or the Fed will suspend (or both), and gold will rebound. ”
In addition, some analysts in said that gold price trends will depend on the consumer price index (CPI) released this week. analysts said that if the report shows a sharp drop in inflation, it may prompt the market to lower expectations of the Fed's extremely tough rate hike again next month, which will be beneficial to gold.
Overall, gold prices are still under strong non-farm data and Fed's aggressive rate hike expectations h The suppression of tml2, gold prices still have downward risks in the short term. Pay attention to the support near the high of 1687.95 and the 10-day moving average of 1685.30 on September 21. If you can maintain the support near 1685, the bulls will still have a chance in the future. Pay attention to the resistance near 55-day moving average of 1722.84 above. If you can top this resistance, it will increase the bullish signal in the future. If you break the key support near 10-day moving average of 1685, it will increase the risk of short-term downwards.
This article is from Huitong.com
