China Gold Network reported on December 18th , on Thursday (December 18), the initial stage of the Asian session, international gold prices continued to be above $1,190 to see the thousand-two "fortress". It seems that the distance within $10 is, but it has been stalemate here for more than two months due to various reasons, including the expectation of the Federal Reserve's interest rate hike and the decline in international oil prices.
On Wednesday (December 18), the Federal Reserve removed the wording of maintaining low interest rates for a long time as expected in its policy resolution, and instead used "patiently" to wait for the road to hikes. Federal Reserve Chairman Yellen bluntly stated at a press conference after the meeting that the Federal Reserve will not discuss interest rate hikes in the "nearly two" meetings. This made the market predict that the bank may start hikes in April next year. The next day, gold fell further away from the $1,200 mark due to this impact, closing down 0.63% to $1,189.78 per ounce.
Fed statement emphasized "patience" at Yellen's press conference, "sharp" at hikes
In the early morning of Thursday, Beijing time, the Fed ended the last two-day FOMC policy meeting of the year. In the statement issued after the meeting, the Fed abandoned the wording that it would maintain nearly zero interest rates for "a considerable period of time", and instead emphasized that the Fed said it would use "patience" to decide when to raise interest rates in the future. Yellen explained at a post-conference press conference that this "patience" must be maintained at least after the last two Fed meetings.
The Federal Reserve’s resolution statement released on the same day showed that the Federal Reserve will continue to maintain the federal funds rate of 0.00-0.25%. While retaining the statement of “a considerable period” in forward-looking guidance, it said it needs to maintain "patience" on the issue of the beginning of normalization of monetary policy.
The Fed said it would remain patient on the time when the first rate hike since 2006 was to replace the promise of maintaining nearly zero interest rates for "a considerable period"; the Fed also raised its evaluation of the job market.
The Federal Open Market Committee (FOMC) issued a statement on Wednesday said: "The committee judges that it can be patient in starting the normalization of monetary policy posture." The Fed statement said, "Based on the current assessment, the committee believes that it can be 'patient' to start normalizing monetary policy stance." It is worth noting that the Fed said its statement is "consistent" with the statement that it would have "a considerable time" before the rate hike.
Bloomberg economists Carl Riccadonna and Josh Wright interpreted in an article that the key point of the FOMC's December statement was that the wording of the Fed's forward guidance was revised, but did not want to really imply any changes in the exit strategy timeline. The
article points out that the word "patience" in the new guidance is borrowed from recent speeches by Fed policymakers and the wording of the 2003-2004 rate hike cycle. After weakening previous words in October and adding new data-dependent words, the new guidance is in line with the Fed's progressive approach to exit strategies.
Subsequently, Federal Reserve Chairman Janet Louise Yellen defined "patience" as "waiting for at least two meetings" in a post-conference press conference, meaning that the Fed will not raise interest rates by at least April next year.
Yellen said Fed policymakers believe that the U.S. economy will "not be able" to show enough vitality to facilitate the first rate hike since 2006. When asked about the next few meetings were “how many times,” Yellen said it was twice.
According to the Fed's original plan, the Federal Reserve will hold a meeting in January and March next year. The subsequent meeting from April 28 to 29 may be a key event node, because the next meeting will have to wait until June of the "mid-year".
Citigroup Inc. Forex strategist Richard Cochinos said Yellen's speech means the possibility of a rate hike as early as April 2015.
In addition, the Fed emphasized in its statement that although the outlook for economic growth is strong, Fed policymakers pointed out that interest rates will be raised at a slow pace in the future, which means the Fed agrees that inflation remains weak.
FOMC expects inflation to develop towards inflation targets. The decline in inflation expectations reflected by market indicators may be temporary. The Fed will closely monitor inflation. Low oil prices will keep inflation low in the short term.
is known as "the Fed News Agency." Wall Street Journal reporter Jon Hilsenrath wrote that the Fed FOMC statement has added the word "will continue to monitor inflation changes closely", which means the Fed is concerned about a decline in oil-related inflation.
The Federal Reserve also released quarterly economic data forecasts on the same day. The forecast showed that 15 of the 17 Federal Reserve officials were expected to raise interest rates for the first time next year, with 14 at the September meeting; 2 officials tended to raise interest rates in 2016, which was the same as the number of people in the September meeting. (See the latest Fed interest rate dot map below)
The latest Fed interest rate dot map
At this meeting, three officials voted against it. Two of them are hawkish commissioners, Dallas Fed Chairman Fisher and Philadelphia Fed Chairman Proso. They hope the Fed can raise interest rates earlier. The other is Minneapolis Fed Chairman Kozerlakota, who is a super dovish member and hopes that the Fed will not rush to change its forward guidance.
What happened to the overnight financial market on Wednesday?
Overall, the market interpretation is still relatively chaotic. The foreign exchange market and the stock market both interpret Yellen's remarks "selectively" from a positive perspective. Therefore, the "U.S. stocks and US dollar rose together" that has not been seen for many days have appeared again. Crude oil buys on dips and continues to "stop attack". Gold prices rose overnight and then turned to decline. The
USD index closed up 1.28% on Wednesday, at least the biggest single-day gain since 2013, to 89.037. The euro fell 1.28% against the dollar to $1.2346, after hitting its lowest since December 9 at $1.2322. The US dollar against the Swiss franc once rose to its highest level of 0.9745 Swiss francs since December 9, with the latest increase of 1.23%. The dollar rose 1.68% against the yen to 118.30 yen, and hit a high of 118.60 yen during the session.
The interpretation of the Fed's position was contradictory at first, but it finally rose with a surge. As of the end of the day, the Dow Jones Index closed up 1.69% and closed at 17,356.87 points; the Nasdaq Index closed up 2.21% and closed at 4,644.31 points; the S&P 500 Index closed up 2.04% and closed at 2012.89 points. Among them, the Dow Jones Industrial Average and the S&P 500 index both had the largest percentage growth since 2013.
Gold prices also fell after the Fed meeting. The latest market shows that international spot gold closed down 0.62% to $1,189.45/ounce on Wednesday. After the Federal Reserve's resolution statement, it fluctuated and rose by about $10 to $1,201/ounce, but after Yellen's press conference, it fell by about $15 to $1,184.
HSBC chief metals analyst James Steel said: "I think the gold market will seek guidance from the foreign exchange market. If the dollar rises meet resistance, the euro will rise slightly, which will be beneficial to gold."
The Christmas holiday is coming. How should gold prices look forward to the future market?
With the announcement of the Fed's last interest rate resolution statement, events that have a significant impact on the gold price trend in the near future have been declared a "past tense". So what kind of market will international gold prices perform in the future as the Christmas holiday in Western countries come?
First of all, it should be clear that as the Christmas holiday in Western countries is approaching, the economic data and events that are not very important in the remaining two trading days this week are unlikely to really shake the market. Gold prices fluctuate more in the recent week based on position adjustments and technical patterns.
However, with the interpretation of emerging market crises such as Russia and the possibility that crude oil may continue to be pushed up sharply by dips, these two things may guide the recent market trend of gold prices.
The "rouble crisis" fermented again on Wednesday. After Russia's unexpected interest rate hike failed to prevent the ruble from plummeting, it was reported that the Ministry of Finance was preparing to sell some of its foreign exchange reserves, and the ruble had rebounded sharply, but its sustainability is worth paying attention to.
was formerly the Russian Central Bank managed the ruble exchange rate. Since the transition to the free-floating exchange rate system last month, the central bank has sold more than $10 billion in foreign currencies to support the ruble in December, selling nearly $2 billion on Monday alone.
Some traders and analysts said the statement of the Ministry of Finance will have little effect. They pointed out that the Ministry of Finance’s decision to sell foreign exchange reserves is no different from the central bank’s approach, and the central bank’s measures have little help to boost the ruble.
As oil prices plummeted, the ruble has been cut in half, and Russia is increasingly feeling the serious impact of economic sanctions.On Monday, the Russian central bank raised interest rates sharply, from 10.5% to 17%, an emergency measure to prevent further depreciation of the ruble.
But the rate hike did not reverse the ruble's decline, but the move exacerbated the panic because the market believed it was a measure after despair. If the ruble crisis worsens and oil prices continue to rebound, it will obviously be the "good news" of gold prices.
Credit Suisse's global metals and mining team said that gold prices are expected to fluctuate between $1,100 and $1,300 per ounce, and lowered the 2015 gold price expectations to $1,225 per ounce, while the long-term gold price expectations are lowered from $1,300 per ounce to $1,250 per ounce.
Deutsche Bank said in a report on Tuesday (December 16) that it expects rising long-term interest rates in the United States and strengthening the dollar to continue to put pressure on gold, so it maintains its bullish view of bearish gold prices in 2015.
ANZ said gold prices will recover next year as demand from China and India will improve, believing that gold prices will still rise even if the Fed raises interest rates. Analysts in the bank said in a note that gold prices are expected to rise to $1,280 per ounce by the end of 2015 and will rise in every quarter next year.
From a technical perspective, gold prices have jumped and dropped frequently in recent days, highlighting the stalemate between gold and silver bulls and bears. As the Western holiday approaches the end of the year, thin trading volume is expected to increase the future market volatility, so we need to pay more attention to trading risks.
In the early trading of the Asian market on Thursday, gold prices rebounded to $1,190 again. If gold prices can stabilize above $1,190 this week, they are expected to continue to launch towards the $1,200 mark. If the short-term gold price continues to close below $1,190, it may fall below $1,180 support.
China Gold Network Market Center data shows that as of 10:59 Beijing time, spot gold was US$1,197.00 per ounce, up 0.64%.
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