On Thursday (October 13) Asian session, spot gold fluctuated narrowly in . It is currently trading around $1,672/ounce. Some dovish content in the minutes of the Federal Reserve meeting released overnight was paid attention to by the market. The minutes of the meeting showed that the Federal Reserve was worried that the anti-inflation action would fail. It is important to "calibrate" to further tighten the pace of policy, with the aim of mitigating the risk of significant adverse impact on the economic outlook. The rise of the dollar index was blocked, providing gold prices with opportunities to rebound; in addition, the core U.S. PPI recorded its lowest in two and a half years, United Nations passed a resolution to condemn Russia, the Bank of England disrupted the situation, and the risk of global economic recession continued, which also provided support for gold prices. Tai Wong, senior trader at
HeraeusPreciousMetals, said “the market is looking for any sign of dove and is paying attention to the word ‘calibration’, so the dollar is down and gold is up”.
However, the market's attention is focused on the US September CPI data that will be released in the evening, and the wait-and-see sentiment is strong, which restricts trading. The market expects that the US CPI data will strengthen the Fed's expectations of further radical hikes in . Fed officials' speeches are still very hawkish, which limits the rise in gold prices.
Considering that the expectation of high inflation in the United States has been partially digested by the market, investors need to be wary of the "boot landing" market or the situation where the CPI unexpectedly falls below expectations. If this happens, gold prices will be expected to usher in a big rise opportunity; on the contrary, if the CPI data unexpectedly is significantly stronger than expected, gold prices may still usher in a wave of decline (the US August CPI released on September 13 unexpectedly is stronger than expected, and gold prices fell about $30 that day).
From a technical perspective, gold price has defended the 1660 mark, -day K-line cross star followed the small positive line, before falling below the 1660 mark, and the short-term trend is slightly bullish; the US dollar index recorded the cross star K-line for two consecutive trading days, implying that the pressure above is strong and the short-term pullback pressure is greater, which is expected to provide opportunities for gold prices to rebound.
In addition, investors should also pay attention to news related to changes in the number of initial unemployment benefits in the United States and the geopolitical situation.
fundamental negative fundamentals
[Federal Kashkali : The threshold for changing the path of interest rate hike is very high]
Minneapolis Fed Chairman Kashkali said on Wednesday that the Fed is focusing on aggressively raising borrowing costs to reduce inflation, and the threshold for retreating from the current path is very high.
"For me, the bar for this change is very high because we haven't seen much evidence that core inflation... is lowering," Kashkali said at an economic development conference in Rhinelander, Wisconsin. He repeated his previous comment that the Fed is "a little distance away" from suspending interest rate hikes.
Kashkali added: "It is more likely that we will raise interest rates to some level above 4%, perhaps 4.5%, and then pause, stay there for a long time when the austerity policy we have completed plays a role in the economy."
[Federal Director Bauman: If there is no sign of a downward trend in inflation, there is still a possibility of a "significant" rate hike]
Federal Director Bauman said Wednesday local time that if there is no sign of a downward trend in inflation, there is still a possibility of a "significant" rate hike; if inflation starts to decline, it will be appropriate to slow down the pace of rate hikes.
Bowman said that he fully supports the Fed's previous 75 basis points rate hike, and inflation is too high, so it must be lowered; the federal funds rate needs to rise to a restrictive level and stay there for "a period of time"
Bowman said that it is "not clear" how high interest rates need to rise, and it is not clear how long it will "continue" to decline in inflation. The major uncertainty of the inflation outlook makes it challenging to provide accurate guidance on the interest rate path.
[ECB Knott: At least two "significant interest rate hikes" are needed]
The governor of the Dutch central bank and member of the ECB Management Committee Kenott said on Wednesday that the ECB needs at least two significant interest rate hikes to reach a neutral level, but there is no need to take a bigger move than in September. He also called for a reduction in the bond holdings of the central bank .
Knott said: "We need to raise interest rates at least twice more sharply before entering the reasonable neutral estimate range."
In addition, Knott said at a forum at the annual meeting of International Monetary Fund (IMF): "I see no signs that if we only raise interest rates by 75 basis points, we will not be able to achieve the stable price task of 2% inflation in the medium term."
Knott said that the two rate hikes will enable the ECB to reach the so-called neutral interest rate, but this may not be enough, and the bank needs to enter a restrictive range, thus hindering economic growth.
fundamentals are mainly favorable
[United Nations passed a resolution to condemn Russia, and the West will provide Ukraine with more air defense weapons ]
United Nations General Assembly passed the resolution with an overwhelming advantage, condemning Russia's attempt to annex four regions of Ukraine. At the same time, Ukrainian allies promised to provide more military assistance after Russia launched a intensive missile attack.
In New York, three-quarters of the 193 members of the UN General Assembly, 143 countries, voted in favor of a resolution Wednesday saying Moscow's move was illegal and deepened Russia's international isolation. Only four countries voted against the resolution with Russia. The remaining countries abstain from the right.
Ukrainian President Zelensky said on Twitter that he "thanks to the 143 countries that support the historic #UNGA resolution... (Russia's) annexation attempt is worthless."
More than 50 Western countries held meetings in Brussels, promising to provide more military aid to Ukraine, especially air defense weapons, as Russian President Putin ordered a fierce retaliatory strike against Ukraine this week in response to the explosion of a bridge in Crimea .
promises from Western countries include France's announcement that it will provide Ukraine with radar and air defense system in the coming weeks. Canada also said it would provide supplies such as shells and winter clothing.
Germany has handed over the first of the four promised IRIS-TSLM air defense systems to Ukraine since the attack on Monday, and Washington said it will speed up the delivery of the promised NASAMS air defense system.
Russia Permanent Representative to the United Nations Nebianjia told the General Assembly before the vote that the resolution was a "politicized and open provocation" and said it could undermine all efforts to help resolve the crisis in diplomacy
Parts of Ukraine sounded air strikes for the third consecutive day on Wednesday. Donetsk Province governor said seven people died in a Russian shelling of a market in front-line town of Avadivka.
Some other places have also reported shelling, but there is no indication that a national attack like the previous two days ago has occurred. Pope Francis condemned the bombings.
US President Biden said on Wednesday that he doubted whether Putin would use nuclear weapon . He told CNN that Putin was a "rational actor, but he clearly misjudged the situation", saying he believed Putin had expected Russian invading troops to be welcomed.
A senior NATO official said that if Russia launches an nuclear strike against , it will change the course of the conflict, which will almost certainly trigger a "physical reaction" of Ukrainian allies - "it may come from NATO itself."
[The British government said it will not reverse the huge tax cuts, nor will it reduce public spending]
The new British government said on Wednesday that it will not reverse its huge tax cuts, nor will it reduce public spending. Faced with further turmoil in the financial markets and concerns about changes in its economic policies, the British government seeks to maintain its original position.
UK financial markets have been in a state of tension since the Chancellor of the Exchequer Kwatten announced a £45 billion (US$50 billion) tax cut on September 23. Kuateng did not explain how to pay for these tax cuts. The strategy will require £62 billion in spending or increase taxes to stop public debt growth - a daunting proposal after more than a decade of government austerity.
Tras and Quatten said their tax cuts will boost economic growth and restore public finances in the medium term.
Faced with the question of how the government will fund its new economic policy, Prime Minister Tras said she will not cut public spending, and Treasury Chief Secretary Chris Philp said the government will not reverse its tax cuts. "We will make sure that debt will fall in the medium term, but we do it not by cutting public spending, but by making sure we use public funds well."
When asked whether she insisted on the promise not to cut spending during the Conservative leader's campaign, she said, "Absolutely, absolutely." The turbulence in the bond market forced the Bank of England to intervene, buying long-term British Treasury bonds after a massive sell-off from pension funds threatened Britain's financial stability.
Tras and Quatten have overturned one of their plans to abandon the highest income tax rate. They also advance the budget release date with the details of the fiscal forecast to October 31.
[OCED: The United States faces "greater than usual" risks in the inflation war]
Organization for Economic Cooperation and Development (OECD) said on Wednesday that due to the rapid rise in interest rates, the uncertainty faced by the United States should adjust its policies as needed when monitoring the impact of global events and their actions on the domestic economy. "Risks and uncertainties are greater than usual and tend to decline." The OECD predicts that the U.S. economy will grow 1.5% this year and 0.5% in 2023. "Inflation may continue unexpectedly, prompting the monetary policy to tighten more radically. Further interference from the Ukrainian war or other factors on global markets may also have a significant negative impact on real GDP growth and lead to higher inflation."
OECD, which said on the other hand, recent supply restrictions and easing of commodity prices may still lead to a slowdown in inflation faster than expected. In its report,
OECD pointed out that inflation poses a "major challenge" in the United States, as inflation has expanded from goods to services, which puts the Fed on the road to active tightening of policies. "Nevertheless, maintaining considerable flexibility is necessary, and policy reviews will benefit from careful monitoring of the impact of global factors driving inflation" and "the impact of tightening financial conditions on the economy."
[Germany Economic Minister: German government expects the economy to fall into recession next year]
German Deputy Prime Minister and Minister of Economic and Climate Protection Habek said on Wednesday that the German government expects Europe's largest economy to fall into recession next year due to the drag caused by the energy crisis, rising prices and supply bottlenecks.
Habek said on Wednesday that the economy will shrink in the third and fourth quarters of this year and in the first quarter of 2023.
He said the German government now expects the economy to shrink by 0.4% next year, according to a previous forecast of 2.5%.
[The US producer price increase exceeded expectations in September, but the core PPI was the lowest in two and a half years]
The US producer price increase exceeded expectations in September, but due to further improvement in the supply chain, the core producer price index was the lowest in the past two and a half years, bringing some hope to the anti-inflation battle.
Labor Department Wednesday's report also indicated that producers may find it difficult to pass on price increases, with indicators that measure changes in wholesalers and retailers' profits hardly rising in September. The price increase of intermediate products and services is not large. "Inflation is all about passing costs on lower production levels, so this report is a comfort for consumers facing out-of-control commodity prices on shelves. The Fed's anti-inflation campaign has not yet won, but at least the producer-level commodity costs have stopped rising at a rate that looked out of control earlier this year." The
Final Demand Producer Price Index (PPI) rebounded 0.4% in September. August data was revised down, showing that PPI fell by 0.2%, and the previous value was 0.1%. Economists surveyed by Reuters have previously predicted a 0.2% rise in PPI in September.
service price rose 0.4%, accounting for two-thirds of PPI growth in September. Service prices rose 0.3% in August. More than a quarter of the growth in September was driven by a 6.4% surge in accommodation prices in hotels and motels.
transportation and warehousing services prices fell by 0.2%, a third consecutive month of decline, also benefiting from the easing of supply chain bottlenecks. Ultimate demand for trade services prices rose by 0.1%.
commodity prices rose 0.4% after falling 1.1% in August. Food prices jumped 1.2%, accounting for 60% of commodity prices. Food prices were boosted by a 15.7% surge in fresh and dried vegetable costs. Pork and egg prices have also risen.
Energy prices rose 0.7%, powered by diesel, residential gas and home heating oil. But wholesale prices of gasoline fell by 2.0%. Commodity prices deducted from food and energy remained unchanged, the lowest level of the so-called core commodity price index since May 2020, with core PPI rising by 0.2% in August.
Core commodity prices rose 7.5% in the 12 months to September, slowing from the 8.1% increase in August.
annual core commodity price growth has been declining since it peaked at 10.2% in April. The price of processed intermediate products rose by 0.1%, while the price of intermediate services rose by 0.3%.
PPI rose 8.5% after 8.7% in August in the 12 months to September, reflecting improvements in supply chains and the decline in commodity prices from spring highs.
"The outlook for inflation in the commodity sector has not changed in the coming months," said Sarah House, senior economist at Wells Fargo. "Looking forward, the price growth of intermediate products and services continues to be on a downward trend, which confirms our view that the worst period of inflation in may have passed, even if inflation may remain high for a period of time."
[Federal minutes shocked the subtle "double hint"]
0 [Federal minutes shocked the subtle "double hint"]
0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 The minutes of the
meeting show that many Fed officials "emphasize that the cost of actions to reduce inflation is too light may exceed the cost of excessive force."
At the meeting, many officials said they raised their assessment of the path to rate hikes that might be needed to achieve the policy-making committee’s goals.
Nevertheless, many members said it is important to "calibrate" further tighten the pace of policy with the aim of mitigating the risk of significant adverse impact on the economic outlook.
At the September meeting, Fed officials raised interest rates for the third consecutive 75 basis points to push inflation back from a 40-year high, Fed Chairman Powell vowed after the meeting that they would "continue to work until we are sure the work is done."
Since the meeting, policy makers have unanimously expressed that they believe the inflation problem is urgently needed because they fear that inflation risks may become entrenched, even if their radical policy tightening will lead to rising unemployment. This view was emphasized in the minutes of
. The minutes showed that several policymakers “emphasized the need to maintain a restrictive position when needed, and several of the attendees emphasized that historical experience shows that it is dangerous to end the deflationary monetary policy cycle aimed at reducing inflation prematurely”.
At the same time, "multiple" decision makers also acknowledged the need to relax in the end, pointing out that "as policies enter restrictive areas, risks will become more bilateral, reflecting the emergence of downside risks, that is, the cumulative limit on total demand will exceed the level required to pull inflation back to 2%. "The minutes of the meeting said that several policy makers at the meeting pointed out that the potential resistance brought by tightening monetary policy and weakening global growth has led to increased risks. Chris Zaccarelli, chief investment officer at
IndependentInvestorAlliance, said: "They have been talking about them preferring to risk recession to keep inflation under control, but they may lose some courage as the recession risk increases.”
[U.S. dollar upside down]
After the record of the last Fed meeting showed some dovish colors, the dollar fell slightly in the short term and closed at 113.26 on Wednesday, down about 0.01%. The K-line recorded a cross star for two consecutive trading days, indicating that the momentum of the US dollar's short-term upward trend weakened and the pressure of the pullback increased, providing a respite for gold bulls. Juan Perez, head of trading at
MonexUSA, said, "Maybe there is a little hope in the meeting minutes, that is, basically officials are weighing the risk of excessive or excessive interest rate hikes, which is not the number one concern now. The number one focus remains inflation. ”
[U.S. Treasury yields fell, selling eased before key CPI data was released]
U.S. Treasury market sell-off eased on Wednesday, with yields rising at the beginning of the release of PPI data, but turned lower after the Fed meeting minutes from September 20-21. Steven Ricchiuto, chief economist at Ruisui Securities, said that investors are in a difficult environment, trying to measure the Fed's strength to fight inflation, while also responding to the Bank of England's emergency measures to support UK pensions after the government's tax cuts disrupted the market.
Ricchiuto said, "You already have inflation, and people are observing whether the stock market is hit at the 3600-point level. "He said he was referring to a resistance level for the S&P 500 index. "There are a lot of people still paying attention to the situation in the UK." Edwin Moya, senior market analyst at
OANDA, said the Fed minutes said, "It is important to calibrate the pace of further tightening of policies to mitigate risks," the market sees this view as dovish. "As the economy deteriorates rapidly, it will be difficult for the Fed to continue radically tightening policies, and the Fed gives us subtle dovish hints here." ”
The current expectation that the currency market is that the probability of Fed policymakers hikes for the fourth consecutive 75 basis points at their meeting on November 1-2 is 92%. At least 50 basis points are expected to raise interest rates by December, and by the end of 2022, the Fed's target range of policy rates will reach 4.25%-4.50%.
But investors are worried that the Fed's most radical policy tightening in decades could put the economy into recession, just as the that has been inverted for months The Treasury yield curve implies. Nancy Davis, managing partner and chief investment officer at Quadratic Capital Management LLC, said Fed vice chairman Brainard (Lael Brainard) recognized the possible consequences of the Fed's actions on Monday. "She noticed the risk of further adverse shocks," Davis said. "Her speech seemed rather dovish to me." "The yield spread of biennial and 10-year Treasury bonds was negative 38.2 basis points, although still inverted, narrowed from negative 57.80 basis points on September 22. The inverted yield curve is seen as a precursor to the recession.
On Wednesday, the yield yield on biennial Treasury bonds, which is usually synchronized with interest rate expectations, fell 2.1 basis points to 4.295%, and the yield on 10-year Treasury bonds fell 2.4 basis points to 3.915%. The 30-year Treasury yield fell 0.7 basis points to 3.895%.
[European stock market fell for the sixth consecutive trading day]
European stock market fell on Wednesday, mixed financial reports made investors uneasy about the prospects for corporate profits. Pan-European STOXX600 index closed down 0.5%, down for the sixth consecutive trading day.
So far this week, the STOXX600 index has fallen 1.5%, and markets are concerned about radical policy measures taken by central banks to address high inflation, as well as recent warnings from the International Monetary Fund (IMF) and World Bank have exacerbated concerns about the recession.
On Wednesday, financial stocks, energy stocks and industrial stocks were the biggest factors that dragged the index, which is expected to hit 200 The worst annual performance in eight years.
Meanwhile, the yield on the U.K. bonds rose sharply after the Bank of England confirmed its temporary British bond purchase plan would end on Friday. London blue chip FTSE 100 fell 0.9%.
Overall, European companies' third-quarter profits are expected to rise 29.4%, slightly below the 33.2% increase forecast in early October, according to Refinitiv IBES.
French stock CAC40 index closed down 0.25%; German stock DAX index closed down 0.39%.
Overall, before the release of the Federal Reserve's September CPI data, the market was strong and the overall fluctuation was small. Some "dove-like hints" unexpectedly appeared in the minutes of the meeting, putting pressure on the US dollar and providing support for gold prices, but the future market is still very dependent on the performance of the US September CPI data. Relatively speaking, the possibility of a sharp decline in gold prices is slightly smaller. Below is the support near 1660 and the support near September 29 low of 1641.35, because the market has partially digested the expectations of strong inflation. If the CPI data meets expectations or is unexpectedly weaker than expected, gold prices are expected to usher in a certain rebound opportunity. Below is the resistance near the Bollinger Band mid-track 1680 mark and the resistance near the 10-day moving average of 1689.20.
This article is from Huitong.com
