At the beginning of the Asian market on Monday (July 25), spot gold fluctuated and fell slightly, once falling to near the 1720 mark. It is currently trading near 1723.86. The dollar's shock rebound put slight pressure on gold prices. However, European and American economic data performed poorly last week, market expectations for a global economic recession have increased, and geopolitical tensions have continued to provide some safe-haven support for gold prices. Investors generally expect that the Federal Reserve will only raise interest rates this week. 75 basis points, expectations for a 100-point interest rate cut have cooled down again. The decline in the U.S. dollar and U.S. bond yields last week also provided gold prices with rebound momentum. Surveys show that most analysts and retail investors have turned bullish on the market outlook.
Phillip Streible, chief market strategist at BlueLine Futures in Chicago, said a lower U.S. dollar, lower growth stocks and lower yields last week all helped gold.
Streible added that while the Fed meeting could be a "high volatility event" for gold, there likely won't be many big rate hikes after the July meeting.
In addition to the Federal Reserve's interest rate decision, investors this week will focus on the U.S. second quarter GDP and July PCE data. The market expects weak U.S. economic growth, which is also expected to provide gold prices with further rebound opportunities.
Fundamentals are mainly bullish
[The United States promises to provide more military support to Ukraine , but the Russia-Ukraine armistice seems to be far away]
The United States has promised to provide more military support to Ukraine, including drones, and is debating whether to send fighter jets Conduct preliminary research. Five months after Russia invaded Ukraine, fighting is still raging in eastern Ukraine.
Russia and Ukraine signed a landmark agreement on Friday (July 22) to reopen Ukrainian Black Sea ports for grain exports. However, at the agreement ceremony in Istanbul, delegates refused to sit at the same table and avoided shaking hands, reflecting wider animosity.
The war has brought Kiev exports to a near standstill, stranding dozens of ships and leaving about 20 million tons of grain in silos.
Ukrainian President Zelensky welcomed the agreement. The agreement frees up about $10 billion worth of grain exports and is bound to alleviate the food crisis. But on the issue of war, he said there could be no ceasefire unless lost territory was regained.
There has been no major breakthrough on the front line since Russian forces captured the last two cities in Ukraine-controlled eastern Luhansk province in late June and early July.
Russia shelled dozens of frontline positions on Friday but failed to seize territory, the General Staff of Ukraine's Armed Forces said.
Russian troops failed when they tried to take control of Vuhlehirska, Ukraine's second-largest power plant northeast of Donetsk (Donetsk), and the troops also tried to advance westward from the city of Lysychansk but were repelled, the staff said.
Kiev hopes its increasing supply of Western weapons, such as the U.S. High Mobility Rocket Artillery System (HIMARS), will allow it to regain lost territory.
The White House announced an additional support package totaling approximately $270 million on Friday and said it was conducting preliminary studies on whether to send fighter jets to Kiev, but would not do so in the short term. This may mean that the United States will significantly expand its involvement in the Russia-Ukraine conflict and may have a more direct confrontation with Russia.
[German manufacturing and service industries both unexpectedly fell into contraction in July]
The preliminary value of the purchasing managers survey released last Friday showed that business activity in Germany unexpectedly shrank in July as companies were hit by inflationary pressures and supply chain disruptions.
S&P Global The initial value of Germany's services industry Purchasing Managers Index (PMI) in July fell to 49.2 from the final value of 52.4 in June, and the initial value of the manufacturing PMI in July fell to 49.2 from the final value of 52.0 in June.
analysts originally expected that both the services and manufacturing PMIs in July would exceed the 50 threshold that separates prosperity and contraction, and were expected to be 51.2 and 50.6 respectively.
htmlThe initial value of the comprehensive PMI in July fell to 48.0 from the final value of 51.3 in June, the lowest level in more than two years. If confirmed in the final PMI reading at the end of the month, it would be the first contraction in business activity since December.Paul Smith, economic director of S&P Global Market Intelligence, said, “After enjoying the growth momentum brought about by the relaxation of epidemic prevention restrictions, the combination of various unfavorable factors in July pushed the German economy into the contraction zone, which is the first time in 2022 so far. For the first time so far."
Smith also said that uncertainty caused by the war in Ukraine, continued supply delays and inflationary pressures were behind "the worst performance in private sector activity since the first wave of the epidemic in spring 2020." reason.
[British business activity grew at the slowest pace in 17 months in July]
An industry survey showed that British business activity grew at the slowest pace in 17 months in July, and inflationary pressures have eased, which may ease the Bank of England Pressure to raise interest rates by a larger margin than usual next month.
The preliminary S&P Global UK Composite Purchasing Managers Index (PMI) fell to 52.8 in July, the lowest since February 2021. June was 53.7. A survey released by
on Friday showed that manufacturing output shrank for the first time since May 2020, but new orders from travel and leisure companies grew strongly. The slowdown is primarily due to weakening demand, but continued shortages of supply and workers are also weighing on growth. Employment growth was the slowest in 16 months.
[Business activity in the Eurozone shrank in July]
A survey showed that business activity in the Eurozone unexpectedly shrank this month, with manufacturing declining at an accelerated pace, while service sector growth almost stagnated as surging costs prompted consumers to cut back on spending.
Data on Friday showed that S&P Global's preliminary Eurozone Composite Purchasing Managers Index (PMI) fell to 49.4 in July from 52.0 in June, well below all forecasts in the survey and for February 2021. lowest value since. The survey estimate was 51.0. The composite PMI is considered a good indicator of the health of the overall economy, with a reading below 50 indicating contraction.
S&P Global Chief Business Economist Chris Williamson said: "The euro zone economy looks set to contract in the third quarter as business activity fell in July and forward-looking indicators suggest worse conditions in the coming months. Excluding the epidemic In the months of lockdown, the contraction in July was the highest since February The PMI showed contraction for the first time since June 2013, indicating that the economy contracted at a quarterly rate of 0.1%. "
The preliminary value of the Eurozone services PMI fell to a 15-month low of 50.6 in July from the final value of 53.0 last month. That was below the median estimate of 52.0 and below the forecasts of all analysts in the survey.
The cost-of-living crisis has kept consumers wary and they have cut back on non-essential spending, causing the service industry's new business index to fall to 48.4 from 51.8, the lowest since February last year.
Manufacturing activity shrank for the first time in more than two years. The manufacturing PMI fell to 49.6 in July from 52.1; an index measuring output fell to 46.1 from 49.3 in June, the lowest since May 2020. The median survey showed analysts had expected the July manufacturing PMI to be 51.0.
Factory managers took a dim view of the outlook for the year ahead, with the future output index falling to 49.7 from 51.5.
[U.S. business activity shrank in July for the first time in two years]
U.S. business activity shrank in July for the first time in nearly two years, as a sharp slowdown in service industry activity overshadowed continued moderate growth in manufacturing activity, reflecting the economy's impact on high inflation and rising interest rates. and deteriorating consumer confidence.
S&P Global data on Friday showed that the preliminary value of the U.S. Composite Purchasing Managers Index (PMI) in July plummeted to 47.5 from the final value of 52.3 in June, which was far worse than expected. A reading below 50 indicates contraction in business activity, a development that could fuel a heated debate over whether the U.S. economy is back in or nearing recession. The U.S. economy fell into recession at the beginning of the COVID-19 epidemic in early 2020.
had a median estimate of 52.6 for the services PMI and 52.0 for the manufacturing PMI.
"The preliminary PMI reading for July points to a worrying deterioration in the economy," S&P Global Chief Business Economist Chris Williamson said in a statement. "Excluding the epidemic lockdown months, output is at its lowest level since the 2009 global financial crisis. The fastest decline. "In the
survey, indicators of new manufacturing orders, unfulfilled orders in the service industry, and future expectations all fell to their lowest levels since the first year of the epidemic.
[U.S. Treasury yields hit eight-week lows on weak data and recession fears]
U.S. 10-year Treasury yields ended last week near their lowest since late May, compounded by weak data released on Friday Amid worries about the global economy, traders reassessed the Federal Reserve's ability to raise interest rates further significantly.
"There was a pretty sharp revision after the PMI data came out," said Subadra Rajappa, head of U.S. rates strategy at Société Générale in New York. "The market is adjusting rapidly to the view that the possibility that the Fed will be able to raise interest rates aggressively during the remainder of the year is reduced."
According to traders, the possibility of a 275 basis point rate hike by the Fed has almost been fully priced in, while a more drastic move is unlikely. The probability is reduced to single digits.
However, U.S. Treasury yields of all years ended close to session lows. The two-year Treasury yield, which typically moves in lockstep with interest rate expectations, fell 12.1 basis points to 2.974%.
10-year Treasury yield fell 15 basis points to 2.758%. The 30-year Treasury yield fell 9.7 basis points to 2.975%.
The two-year/10-year Treasury yield spread, considered an indicator of economic expectations, was negative 22.0 basis points. Adam Button, chief currency strategist at
Forexlive.com, said, "The market feels that due to the rapid slowdown in economic growth, the interest rate hike cycle will end early. The U.S. service industry PMI released on Friday was shockingly weak, which means that the Fed will %, with a rate cut likely in 2023. When these cuts do come into view, gold prices will soar on a weaker dollar.”
[The probability that the Federal Reserve will raise interest rates by 100 basis points in July has dropped to 20.1%, and the market generally expects to raise interest rates by only 75 basis points]
According to CME "Fed Watch": U.S. The probability that the Fed will raise interest rates by 75 basis points in July is 79.9%, and the probability of raising interest rates by 100 basis points is 20.1% (it once soared to 80% on July 4, and then quickly fell back to 20%, but it basically remained at 20% last week) around 30%).
Goldman Sachs Economists believe that when the Federal Reserve decides on interest rates next week, it will not go all-out to fight inflation. Chief Economist Jan Hatzius said that due to softening inflation expectations and falling gasoline prices, the FOMC is not expected to accelerate the pace of interest rate increases in the near future, and will only raise interest rates by 75 basis points at the July meeting. To put it another way, the effect of raising interest rates by 100 basis points this time and reducing the rate hike in the remaining three meetings during the year is not much different from the effect of raising interest rates by 75 basis points and increasing the rate in the remaining three meetings during the year.
A Reuters survey of economists showed that the Federal Reserve will raise interest rates again by 75 basis points. Some hawkish officials favor a 75 basis point rate hike, weakening expectations for a 100 basis point rate hike. Trends in federal funds rate futures show there is only about a one-fifth chance of a one-percentage-point rate hike, broadly consistent with the survey. But this is the most aggressive rate hike in decades and has heightened concerns about an economic recession. There is a 40% chance that the U.S. will be in recession within the next year and a 50% chance within two years. This proportion increased significantly from 25% and 40% in June.
MBB Capital Partners chief investment officer Mark Spindel said: "Based on what I've heard, in the absence of the most important statement, the Fed's rate hike in July seems to be around 75 basis points."
Rabobank expects the FOMC to The base interest rate was raised by 75 basis points to 2.25-2.50%. The balance sheet reduction plan remains unchanged, with the balance sheet expected to shrink by US$47.5 billion per month in August and US$95 billion per month in September. The Fed still underestimates the persistence of inflation and has yet to acknowledge that a wage-price spiral has begun in the United States. Rate hikes of 50 basis points are expected at each meeting for the remainder of the year, which would push the target range for the federal funds rate to 3.75-4.00% by the end of the year, above the 3.4% projected in the FOMC dot plot.
ING expects that the Fed's interest rate expectations have been fluctuating before, but the market is now almost certain that the Fed will raise interest rates by 75 basis points. Therefore, the first two hawks said that hotter data is needed to justify a 75 basis point increase in interest rates. Base points are not a suitable option. Gasoline prices are showing an encouraging downward trend, but rate hikes of 50 basis points are still expected in September and November, with a final rate hike of 25 basis points in December. The risk of a recession remains, with the Federal Reserve likely to cut interest rates next summer.
Forbes analyst Wayne Duggan said the Federal Reserve may raise interest rates by 75 basis points for a second consecutive time and continue to allow the reduction of its $9 trillion balance sheet as it attempts to reduce inflation without tipping the U.S. economy into recession. Employment data suggests the labor market has not yet softened. Brian Price, head of investment management at Commonwealth Financial, said any more action than a 75 basis point hike would surprise the market. basis points, but since this has been fully priced in by the market, it is unlikely to push the dollar to new highs. Given that significant interest rate hikes have become the established norm among global policymakers, a 75 basis point hike is no longer that significant. Still, investor appetite to hold the U.S. dollar remains strong as economic and geopolitical challenges in the European Union limit the euro's upside. This happened even as the European Central Bank raised interest rates by 50 basis points to start the EU's tightening cycle.
Fundamentals are mainly negative
[ Yellen: The U.S. economy is slowing down, but recession is not inevitable]
U.S. Treasury Secretary Yellen said on Sunday (July 24) that U.S. economic growth is slowing down, and she admitted that there is Recession risks, but also said an economic downturn is not inevitable.
Yellen said on NBC's "Meet the Press" program that strong hiring figures and consumer spending indicate that the U.S. economy is not currently in recession.
U.S. hiring momentum remained strong in June, with 372,000 new jobs and the unemployment rate remaining at 3.6%. This is the fourth consecutive month that job growth exceeded 350,000.
"This is not an economy in recession," Yellen said, "but we are in a transition period and growth is slowing, and that is necessary and appropriate."
Still, last week's data suggested the labor market is slowing Weakened, jobless claims hit the highest in eight months.
Yellen believes inflation is "too high" and recent Fed rate hikes are helping to control soaring prices. Additionally, the Biden administration is selling off the Strategic Petroleum Reserve, which Yellen said has helped lower gasoline prices.
She said, "Just in recent weeks, we have seen the price of gasoline (per gallon) drop by about 50 cents, and it should drop further."
Yellen, a former Fed chair, hopes the Fed can give the economy Cool down and bring prices down without triggering an overall economic downturn. "I'm not saying we will definitely avoid a recession," Yellen said, "but I think there are ways to keep the labor market strong and lower inflation at the same time."
U.S. first-quarter gross domestic product (GDP) year-on-year The final value was a contraction of 1.6%. Economists surveyed by Reuters predicted that data to be released on Thursday (July 28) is expected to show growth of only 0.4% in the second quarter.
Yellen said that even if the second-quarter data is negative, given the strong job market and strong demand, it does not indicate that an economic recession has formed. "A recession is a general weakening of the economy. We're not seeing that right now."
White House National Economic Council Director Brian Deese said on Twitter on Sunday that the upcoming second-quarter data will be "retrospective in nature," which he called very important background. "Meanwhile hiring, spending and production numbers look solid," he said.
[ Nomura Securities Prospective Federal Reserve Interest Rate Resolution: Expected to Raise Interest Rates by 100 Basis Points]
Nomura analyst Aichi Amemiya said that the Federal Reserve is expected to raise interest rates by 100 basis points in July. The CPI data in June shows that the Federal Reserve needs to act more aggressively.June CPI data came in at 9.1% year-on-year, with both headline and core inflation surprising. Whether from the perspective of forecasting or optimal monetary policy, raising interest rates by 100 basis points is the right choice.
[Net long bets on the U.S. dollar increased to the most since mid-May in the last week]
The latest data reflects the strengthening of bullish sentiment on the U.S. dollar. According to data released by the U.S. Commodity Futures Trading Commission (CFTC) on Friday, speculators held shares in the past week. Net long dollar bets rose to the most since mid-May.
In the week ended July 19, net long positions in the U.S. dollar increased to $18.98 billion from $16.69 billion the previous week, marking the third consecutive week of increases.
The US dollar position of Chicago International Money Market (International Moary Market) is calculated based on the net positions of six major currencies: Japanese yen, euro, British pound, Swiss franc, Canadian dollar and Australian dollar.
So far in 2022, the U.S. dollar index has risen 11.5% and is on track for its largest annual gain since 2014. The U.S. dollar index held the mid-track support of the daily K-line Bollinger line in the last five trading hours, closing at around 106.56. Investors need to beware of the possibility of the U.S. dollar regaining its strength.
Market outlook
Last week, 18 Wall Street analysts participated in KitcoNews' gold survey. Among participants, 12 analysts (67%) believe gold prices are bullish in the short term, and 6 analysts (33%) are bearish on gold. No analysts were bearish.
Due to technical problems, the online voting for ordinary investors only received 187 votes. Among them, 105 people (56%) expected gold prices to rise, 52 people (28%) expected gold prices to fall, and 16 people (31%) had flat expectations in the near future. Chris Vecchio, senior market strategist at
DailyFX.com, said that the dollar is losing momentum as the Fed's aggressive price action has been fully priced in by the market. He added that the looming global recession and a potential sovereign debt crisis in Europe could cause the dollar and gold to rise simultaneously.
Vecchio said that, like the U.S. dollar, there are signs that real yields may be peaking, creating another tailwind for precious metals . "A debt crisis in Europe is not guaranteed, but it is lurking in the shadows, and as long as concerns about the euro exist, there is room for both gold and the dollar to move higher."
However, Vecchio added that he believed gold's strength would be limited, Solid resistance lies around $1,760. He said investors should prepare for higher volatility in the current environment.
Adrian Day, president of Adrian Day Asset Management, said that despite the Federal Reserve raising interest rates at an unusual pace, inflation will remain high, putting pressure on real yields. “Markets will soon realize that the Fed’s rate hikes are not enough to curb inflation without triggering a severe recession, and that what they are currently doing is not enough to bring inflation down meaningfully. The Fed doesn’t even need to adjust or pause; just Recognizing that they can't achieve their goals will cause gold to explode."
However, not all analysts are optimistic that gold is reversing and the dollar has peaked. Some analysts said the U.S. dollar remains an important safe-haven asset in global financial markets. David Madden, market analyst at
Equity Capital, said, "The dollar may have paused, but the dollar's upward trend remains. It is still the strongest currency in the market. Gold prices are expected to struggle at the resistance level of $1,745 and will look to sell on rallies. .
This Wednesday’s Federal Reserve interest rate decision will be the focus of the market this week. It needs to be reminded that the second quarter GDP of the United States will be this week. The release of four is also the focus of the market this week.
Analysts believe that the U.S. economy is still in a dangerous situation in the second quarter. As the Federal Reserve steps up its efforts to curb inflation, concerns about the U.S. recession have further intensified. Bloomberg The economy is still in danger. A survey by experts shows that the U.S. GDP is expected to grow slightly at an annualized quarterly rate of 0.9% in the second quarter, compared with a decline of 1.6% in the first quarter. The U.S. economic performance in the first half of this year will be the worst during the post-epidemic recovery.Federal Reserve Chairman Jerome Powell may face a difficult situation at the press conference, where he needs to reiterate his commitment to get inflation back to 2% and admit that the economy has lost momentum. At a time when economic activity is slowing, it may be harder to hear hawkish tones.
Overall, U.S. Treasury yields retreated and the dollar fell last week as disappointing U.S. data and downbeat expectations for other data dampened expectations for a sharp 100 basis point rate hike by the Federal Reserve at its July 26-27 policy meeting. , while economic risks persist, the safe-haven appeal of non-yielding gold has been strengthened, which helped gold prices rebound from near the 1,680 mark last week.
At present, gold prices still tend to fluctuate and rebound further, and are expected to confirm the bottom. Focus on the resistance near the high point of 1752.36 on July 8. If it can break through this resistance, it will increase the bullish signal in the market outlook. Further stronger resistances are at The low on May 16 is 1786.70 and the 55-day moving average is around 1806.32. Below, pay attention to the support near the 15-day moving average 1715.56 and the 1700 integer mark.
This article comes from Huitong.com
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-