In the week of October 3, international gold prices continued to fluctuate upward, with the highest rebound once hitting around $1,730/ounce, but failed to stabilize the $1,700/ounce mark. As the geopolitical situation escalates again, and the latest PMI and other economic data released by the United States and Europe are generally lower than expected, the market believes that , the Federal Reserve's may change its hawkish position, and international gold prices have risen sharply. Subsequently, the US non-farm employment data in September improved and Federal Reserve officials expressed hawkish statements, and international gold prices fell again under pressure.
At the beginning of last week, the yields of US dollar index and US bond fell. At the same time, the prices of US and European stock markets, crude oil and precious metals rose sharply. Therefore, the Federal Reserve and the European Central Bank quickly came forward to clarify the hawkish position again. Among them, many officials including Evans came out to emphasize the importance of controlling inflation and hit the market's expectations for the Fed to turn doves.
Overall, the two major currencies of the US dollar and the euro have entered a stage of accelerated tightening. For the United States, its current means of dealing with stagflation is to create a new economic crisis. On the one hand, it can use the new crisis to quickly solve the inflation problem, and at the same time it is conducive to Wall Street to harvest global wealth, further expansion of the US dollar, and to the United States to crack down on major competitors.
For Europe, many reasons have caused a sharp rise in energy prices, which has further intensified the stagflation in Europe, and in fact it has entered the abyss of long-term recession. From past history, it is difficult for a single monetary policy to deal with stagflation. Fiscal policy is needed to cope with stagflation. However, the problem is that the debt of the United States and Europe is in a high growth cycle (of which the US debt has reached US$31.1 trillion, far exceeding its nominal GDP of US$23 trillion in 2021, which is close to the debt ceiling of 31.4 trillion). The current high global inflation is precisely due to the monetization of debt and crises in the United States, Europe and other countries. If a positive fiscal policy is continued, it will only backfire and bring greater pain to itself and the whole world. Judging from the statements of the Federal Reserve and the ECB and the facts of the market inflation, neither the Federal Reserve nor the ECB can stop the aggressive pace of hiring rate hiring , which will further accelerate the decline in global liquidity in the fourth quarter, which will cause further damage to venture capital.
For the gold market, although it will still be under pressure from the US and Europe interest rate hikes in the short term, the energy supply shortage caused by further escalation of the geopolitical situation and the destruction and instability factors caused to the global economy and society will undoubtedly heat up the market's risk aversion sentiment again, which will be a strong boost to gold prices. Looking ahead to this week, the market focus will continue to pay attention to the progress of the geopolitical situation. In terms of data, focusing on the US CPI and retail sales data in September will have a certain impact on the gold market trend this week.
From a technical perspective, there are already obvious signs of bottoming out of international gold prices. Pay attention to the support strength of the range of USD 1650~1645/ounce below. Upward attention is $1720~1730 per ounce pressure.
