During the Asian session on Thursday (December 22), spot gold fluctuated and rose slightly, currently trading around $1,818.88 per ounce. The U.S. existing home sales data in November performed poorly, which dragged down the U.S. dollar. It has fallen by 0.24%, giving up most of Thursday’s gains ; U.S. bond yields slowed their gains on Wednesday and weakened slightly on Thursday, providing support for gold prices; the president of Ukraine went to the United States to meet with U.S. President Biden , increasing concerns about the geopolitical situation and increasing the appeal of gold. Gold technical bullish signal has increased, is expected to break upward slightly.
This trading day will focus on changes in the number of initial jobless claims in the United States and the performance of the final value of U.S. GDP in the third quarter. On Wednesday, data showed that U.S. consumer confidence rose to an 8-month high, and U.S. stocks also rose sharply, which made gold bulls still have concerns.
The core personal consumption expenditures (PCE) price index to be released on Friday is also the focus of investors this week.
David Meger, head of metal trading at HighRidgeFutures, said, "We believe that the trend of gold is still sideways to higher. The market is paying attention to the Federal Reserve's interest rate hike in early 2023. Views that will end.”
U.S. existing home sales plunged 7.7% in November, the longest losing streak in more than 20 years
Data on Wednesday showed that existing home sales fell for 10 consecutive months in November, the longest losing streak since 1999. The Federal Reserve is currently in the midst of the fastest interest rate hike cycle since the 1980s, suppressing inflation by trying to cool demand for everything from housing to labor, and the economy faces the risk of recession.
As the housing market slumps, economists believe the labor market will loosen next year and the unemployment rate will rise. Although the housing market represents only a small part of the economy, it has a significant impact on other areas of the economy.
Fewer consumers plan to buy a home in the next six months, which could be a drag on home sales.
The National Association of Realtors (NAR) said in a report on Wednesday that existing home sales fell 7.7% in November to a seasonally adjusted annual rate of 4.09 million units.
This is the lowest level since November 2010, excluding the plunge during the first wave of the COVID-19 pandemic in spring 2020. sales are declining in all four regions, with plummeting 35.4% year-on-year in November compared to .
Reports this week showed homebuilder confidence fell for a record 12 months in December, while single-family housing starts and building permits fell to their lowest in two and a half years in November. The housing market boomed early in the pandemic as Americans bought larger homes to accommodate the need to work from home, pushing home prices to levels beyond the reach of many.
Even as demand falls, supply remains tight, keeping home prices rising, but at a slower pace.
In November, the median price of existing homes rose 3.5% year-on-year to $370,700. This is still the highest November house price ever recorded, with prices still about 37% above pre-pandemic levels.
The average interest rate on a 30-year fixed-rate mortgage surged above 7% a few months ago, the highest level since 2002, according to mortgage finance agency Freddie Mac. Although it later fell back to 6.31% last week, it was still double the same period last year.
U.S. Treasury yields' rise slows as market awaits inflation data due on Friday
Longer-term U.S. Treasury yields were little changed on Wednesday as investors awaited inflation data due on Friday for further clues on whether price pressures continue to ease. The U.S. 10-year Treasury bond yield recorded a cross star on Wednesday, suggesting that the upward momentum has weakened. The Asian market weakened slightly on Thursday. The U.S. 10-year Treasury bond yield currently fell 0.84% and is trading around 3.651%.
At present, U.S. bond yields short-term are facing further downside risks, which is expected to provide an opportunity for gold prices to rise.
Investors are pricing in a more dovish policy path than Fed officials have suggested, amid optimism that inflation will continue to fall from its highest level in decades.
Thomas Simons, money market economist at Jefferies Financial Group, said the market "expects the Fed to not actually deliver on what they tell us it's going to do."
If the personal consumption expenditures (PCE) data released on Friday are higher than expected, or if the consumer confidence data released on the same day show that inflation expectations are still high, this may become a concern for the Fed.
Simons said current inflation expectations are still quite high relative to what the Fed really needs to get inflation down to 2%, adding that "the fact should be emphasized that when the Fed says they expect to keep interest rates higher for an extended period of time, they mean it." Some analysts said the shift could make U.S. Treasuries less attractive to Japanese investors as a currency hedge.
However, "While this may be a test of domestic tolerance for higher interest rates, it is unclear whether this is the start of a trend," said Evan Rourke, director of portfolio management at Parametric Portfolio Associates. "Japan Rates Still well below U.S. interest rates, and with no clearer signs of a trend forming, we are unlikely to see a significant return of capital. "
The U.S. 10-year Treasury yield was essentially flat on Wednesday, closing at around 3.684%, and the two-year Treasury yield fell 5 basis points to 4.215% on Wednesday.
The German Finance Ministry predicts that economic activity will be sluggish in winter and inflation will ease in 2023.
The German Finance Ministry released a monthly report on Thursday, saying that it expects German economic activity to remain sluggish in the fourth quarter of this year and the first quarter of next year, and that the inflation rate will decline during 2023. "Overall, the economic situation is expected to remain subdued during the winter half."
"However, relatively stable labor market conditions and government relief measures... are providing supportive momentum," the report said. Current estimates show inflation will fall next year, albeit at a higher level.
reported that tax revenues in November increased by 22% year-on-year to 55.95 billion euros. Tax revenue increased by 8.7% from January to November this year.
Finance Minister Lindner pointed out in an exclusive interview in the report that the debt level was higher than his ideal level due to the response to Russia's invasion of Ukraine, but this was inevitable because of the need for special responses to challenges such as soaring energy prices. "Otherwise, our country's long-term economic losses will be greater than the current debt burden."
Lindner said that his goal is to return to sustainable and stable fiscal policy in the long term. If Germany successfully exits these crisis measures, it will see a significant reduction in overall debt around 2030.
The United States announced a $1.85 billion new military aid package to Kiev
Ukrainian President Zelenskiy and U.S. President Biden met at the White House on Wednesday. This was Zelensky's first foreign visit since the outbreak of the Russia-Ukraine war. The United States announced new military assistance including Patriot missiles.
Zelensky plans to seek more support during this trip. Wearing his signature olive green pants and sweater, he posed with Biden and first lady Jill on the White House lawn before the two leaders met in the Oval Office.
Biden said at a press conference that Russian President Putin had no intention of ending "this brutal war."
Biden announced a new $1.85 billion Ukraine security aid package that will include a Patriot air defense system.
Biden said it would take some time to train Ukrainian troops to use the Patriot system to counter Russian attacks.
Zelensky said that the United States' commitment to provide the Patriot surface-to-air missile defense system is an important step for Ukraine to establish an effective air defense system .
Zelensky told a White House press conference: “This is the only way we can deprive terrorist states of their main tool of terror."
Russian President Vladimir Putin said at the year-end meeting of the Ministry of Defense that the Russian army fought like heroes in Ukraine, will be equipped with modern weapons, and will achieve all goals of Moscow .
Putin said in a speech on Wednesday that the government has provided equipment and hardware There is no cap on funding, but the military must learn from the problems experienced in Ukraine and fix them
He supported a plan by the defense secretary to increase the size of the armed forces by more than 30% to 1.5 million combat personnel
U.S. consumer confidence hit record high in December. Eight-month high
U.S. consumer confidence rose to an eight-month high in December as inflation eased and the labor market remained strong, but concerns about a recession persisted, leading to fewer households planning to buy commodities over the next six months.
"Consumers may be more confident than they were in the summer months, but they are still acting more cautiously than in 2021," Wells Fargo Senior Economist Sam Bullard said. "The outlook for consumer confidence in 2023 will depend on whether the Fed can achieve a soft landing on the so-called narrow runway. "
World Enterprise Research said consumer confidence index rose to 108.3 in December from 101.4 in November, the highest since April. Economists surveyed had previously forecast the index at 101.0. Although the survey placed more emphasis on the labor market, the rebound in confidence was consistent with University of Michigan Consumers The rise in confidence is consistent with the improvement.
Consumers' 12-month inflation expectations fell to 6.7% from 7.1% in November, the lowest since September 2021. The improvement mainly reflects lower gasoline prices and is consistent with recent data showing consumer price growth slowing in November. It's disturbing, but it peaked a few months ago.
's current situation index, which is based on consumers' assessment of current business and labor market conditions, rose to 147.2 from 138.3 in November. The expectations index, based on consumers' short-term outlook on income, businesses and labor market conditions, rose to 82.4 from 76.7.
But the indicator is still close to 80, a level that the World Enterprise Research Institute says is associated with recession.
As a result, consumers are less enthusiastic about making big-ticket purchases over the next six months. The proportion of consumers who plan to buy motor vehicles has not changed much, while the intention to buy electrical appliances is the lowest since July.
This is also a result of rising borrowing costs, because these Goods are mostly purchased through loans. The Fed has raised its policy rate target range by 425 basis points this year, from near zero to 4.25%-4.50%, the highest since late 2007. Last week, the Fed projected that borrowing costs would increase by at least another 75 basis points by the end of 2023.
However, the share of consumers planning to take a vacation within the next six months rose to 46.2% from 45.5% in November. Most people plan to vacation locally, which could help support consumer spending.
The survey's so-called labor market disparity indicator, which reflects whether respondents think jobs are plentiful or hard to come by, rose to 35.8 from 31.5 in November. This indicator is related to Department of Labor The unemployment rate is related, and the increase in December is consistent with tight labor market conditions.
Overall, although U.S. consumer confidence rose to an eight-month high, putting gold prices under slight pressure, the gold price's callback near the strong resistance level was small, suggesting strong buying below, and the direction of least resistance is upward. Poor existing home sales data and tense geopolitical tensions are also bullish for gold prices. If the U.S. dollar and U.S. bond yields weaken further in the short term, gold prices are expected to break through the resistance near the previous high of 1824.39. Further resistance above will focus on 1833 and 1847.
This article comes from Huitong.com
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