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Market News Gold Trading Reminder: The dollar is strong in the "return of the king", and durable goods orders will assist?
Gold Trading Reminder: The dollar is strong in the "return of the king", and durable goods orders will assist?
Hawkish comments from policymakers in many countries last week also raised the risk of global central banks aggressively tightening interest rate policy; the most important of which is from the Federal Reserve, which is expected to raise interest rates by 50 basis points in each of the next two meetings, investors Concerned about the increased opportunity cost of holding gold, the U.S. dollar index has once again hit a new high in more than two years; and the new crown epidemic in Asia has put pressure on commodities, and gold prices have also been dragged down.
2022-04-26
11210
In the Asian session on Tuesday (April 26), spot gold fluctuated in a narrow range near the 1900 mark, which continued to be suppressed by factors such as the strong dollar and the prospect of global central banks raising interest rates. Gold prices fell sharply on Monday, and hawkish comments from policymakers in many countries last week also raised the risk of global central banks actively tightening interest rate policies; the most important of which is from the Federal Reserve, which is expected to raise interest rates by 50% in the next two meetings. 1 basis point, investors are worried about the increased opportunity cost of holding gold, and the US dollar index has once again hit a new high in more than two years; and the new crown epidemic in Asia has put pressure on commodities, and gold prices have also been dragged down.
Investors need to continue to pay attention to the situation in Russia and Ukraine and the news related to the new crown epidemic on this trading day. United Nations Secretary-General Guterres will travel to Moscow on Tuesday to meet with Putin, and hold a working meeting and lunch with Russian Foreign Minister Lavrov.
In terms of economic data, we need to pay attention to the performance of U.S. durable goods orders in March. At present, market expectations are relatively optimistic, and the data is biased towards negative gold prices before the data is released.
[The U.S. dollar index once again refreshed a more than two-year high on Monday]
As the wave of risk aversion hit global markets, the U.S. dollar continued its gains on Monday, reaching a new high of 101.86 since March 2020, and was last at 101.76, up 0.7%, the largest one-day percentage gain since March 11.
As the Ukrainian war enters its third month, growing fears of a worsening outbreak in Asia have sent Chinese stocks tumbling and investors have dumped previously favored currencies such as the Australian dollar.
Joe Manimbo, senior market analyst at Western Union Business Solutions, said: “Given the bleak outlook for the world economy, coupled with the Fed’s increasingly hawkish rhetoric about sharp rate hikes to curb inflation, the dollar is gaining popularity. Adding to the risk-off sentiment, that helped the dollar to some extent.”
Rupert Rowling, market analyst at Kinesis Money, said the Fed is all but certain to raise interest rates in both May and June, and possibly in July, all of which are supporting the dollar, making dollar-denominated gold difficult for overseas buyers. more expensive
Raffi Boyadjian, chief investment strategist at XM, mentioned: "Investors have fled to the dollar and U.S. Treasuries rather than the traditional safe-haven gold. Although U.S. Treasury yields of various days fell across the board on Monday, they remained relatively high. , reflecting the Fed's expectation of a sharp rate hike in the coming months."
[Trader: Although the U.S. dollar index is technically overbought, further gains can still be expected]
The U.S. dollar index has risen just over 14% since January 2021 to a high of 101.86, and despite being overbought on the monthly, weekly and daily charts, some traders see a test of 2020 in sight. March high of 102.99.
(U.S. Dollar Index Annual Chart)
With the index fast approaching this level, the market will be looking for a higher bullish target. The 38.2% Fibonacci retracement of the decline from February 1985 to March 2008 (164.72 to 70.698) is at 106.61.
For those still looking for a bigger rally, another Fibonacci level (76.4%) from the July 2001-March 2008 dip (121.02 to 70.698) is at 109.14. But unless the dollar makes a sizeable correction first, that level could be out of reach; but the nature of the current broad dollar rally does have the potential to support further big gains.
The three major currencies in the dollar basket are struggling right now. Sterling, euro and yen weakened sharply, while the dollar continued to benefit from the Fed's hawkish policy bias.
[Survey: The cost of living crisis in the UK will seriously affect economic growth, the Bank of England is expected to raise interest rates next week]
Britain's cost of living crisis will have a severe impact on economic growth this year, a Reuters poll showed, but the Bank of England is still expected to raise interest rates next week, its fourth meeting in a row.
Inflation hit a 30-year high of 7.0% in March [nZRS0048VX], and a Reuters poll shows inflation will be higher this quarter, meaning British households face the biggest cost-of-living tightening since records began in the 1950s.
Russia’s invasion of Ukraine and China’s reimposition of lockdowns have exacerbated supply chain disruptions caused by the coronavirus, soaring energy bills and tax increases that have eroded consumers’ purchasing power.
When asked what impact the cost of living crisis would have on growth, 17 of 22 analysts said the impact would be severe. One said it was very serious, and only four said the impact would be moderate.
"The shock to real income was already brewing last autumn, but the scale of the problem we're seeing now is unimaginable," said Stefan Koopman of Rabobank.
In response to a separate question, more than half of respondents said it would take more than a year for the crisis to ease significantly.
British inflation is expected to hit 8.4 percent this quarter, more than four times the Bank of England's 2.0 percent target, and up from last month's forecast of 7.7 percent. Inflation will gradually ease over the next few quarters, but the final estimate shows that the target level will not be reached until the end of 2023.
Chart: UK Inflation and Monetary Policy Outlook
The Bank of England followed in the footsteps of other central banks in cutting interest rates to record lows in the early days of the Covid-19 pandemic, but started the current tightening cycle in December.
Of the 44 analysts surveyed between April 19-25, 33 believed the central bank would raise rates by 25 basis points to 1.00% at its May 5 meeting. Ten said rates would remain unchanged and one expected a 50 basis point hike.
The median forecast showed the Bank of England raising rates on May 5 by the same amount in the next quarter and early 2023, bringing the benchmark rate to 1.50% before remaining there in 2023.
Analysts, however, are clearly divided, with 10 expecting a lower rate at the end of 2022 than the median forecast of 1.25%, 17 expecting it to be at the same level and 20 expecting it to be higher. The highest estimate of the year-end interest rate level is 3.00%.
[Survey: Riksbank expected to raise interest rates by June, soaring inflation will force it to change course]
Sweden's central bank is likely to start raising interest rates by June and possibly even this week, a Reuters poll showed on Monday, as soaring inflation forces a sudden shift from its ultra-easy policy stance.
Riksbank has kept its benchmark interest rate at 0% since late 2019 and, based on its current policy path, does not expect any rise until the end of 2024, although several policymakers at the central bank have questioned that prospect.
Russia's invasion of Ukraine has exacerbated supply chain bottlenecks already strained by the coronavirus pandemic, pushing up fuel prices.
This has a knock-on effect on a basket of consumer goods, with Capital Economics senior economist David Oxley saying Sweden's interest rate path is now "significantly outdated".
Three of the 16 analysts polled, including Oxley, predicted the Riksbank would raise interest rates by 0.25% on Thursday. Two of the three said the Riksbank would raise interest rates again in June. Seven analysts forecast a first rate hike in June.
The policy rate will hit 1.00% by the end of 2023, according to the median forecast in the survey. The Riksbank is also expected to allow its balance sheet to start shrinking this year, another reversal from current policy.
Julius Baer analyst Carsten Menke said, “Fears of rate hikes seem to have prevailed recently, with our three-month price target of $1,850, we’ve always considered gold to be quite expensive as a safe-haven asset. We would think that inflationary pressures are about to ease. , which should take away some of the safe-haven demand for gold that we've seen."
[The United States will soon reopen the embassy in Ukraine, and the Russian-Ukrainian war continues to burn]
The U.S. will reopen its embassy in Ukraine and pledge more military aid, two senior officials from President Biden's administration said during a visit to Kyiv. At the same time, Russia warned Washington to stop supplying weapons to Ukraine as the war in eastern Ukraine continues.
Both U.S. Secretary of State Blinken and Defense Secretary Austin said their presence in the Ukrainian capital was a testament to Ukraine's tenacity in forcing Moscow to abandon its offensive on Kyiv last month. Russian Foreign Minister Sergei Lavrov said late Monday that the crisis would end with an agreement, but the content of the agreement would depend on the military situation. He criticized Kyiv for just pretending to be negotiating.
Earlier, Russia's ambassador to Washington demanded that the United States stop arms shipments, warning that large-scale arms shipments from the West had exacerbated the conflict.
The U.S. has pledged $713 million in new aid to Ukraine and other countries in the region deemed potentially vulnerable to Russian threats. The White House also warned of possible further sanctions on Russia.
With another $322 million in military aid to Ukraine, the total U.S. security assistance since Russia's invasion of Ukraine would reach about $3.7 billion, an official said
Russian President Vladimir Putin slammed the West on Monday for failing to divide Russian society and accused it of inciting Kyiv to plan attacks on Russian journalists. Ukrainian security services dismissed Putin's remarks.
Meanwhile, Ukraine's military command said Russia was trying to disrupt its allies' arms supply to Ukraine by bombing Ukraine's railway infrastructure.
The Russian Defense Ministry later said its missiles destroyed six railway facilities in the eastern Donbas region used to transport foreign weapons to Ukrainian troops.
Five train stations in western and central Ukraine were attacked on Monday, killing one person, Ukrainian TV said, citing the state-run Ukrainian Railways.
Outside the Ukrainian capital, the war continues in eastern and southern Ukraine, where Russia launched a massive offensive last week.
Dmitry Polyanskiy, Russia's first deputy permanent representative to the United Nations, said on Monday that a ceasefire in Ukraine does not make sense at this stage, as Kiev could use it as an opportunity to try to discredit Russia after it denied a deal with Moscow on a humanitarian corridor
About 15,000 Russian soldiers have been killed since the invasion began, British Defence Minister Wallace said, according to an update from The Guardian. Speaking to Parliament on Monday afternoon, he added that in addition to the death toll, 2,000 armoured vehicles were destroyed or captured, including 530 tanks. Russia is believed to have lost more than 60 helicopters and fighter jets.
Wallace also confirmed that the UK will send a small number of Tempest missile launchers to Ukraine, with the total military aid likely to rise to £500m. The UK has sent 5,361 NLAWs, 200 Javelins and will provide 250 Starstreak anti-aircraft missiles.
Russian Foreign Minister Sergei Lavrov warned in an interview with Russian media that there is still a "real" danger of a third world war. He also said the shipment of Western weapons to Ukraine meant that the NATO alliance was "essentially at war with Russia".
On the whole, although the turmoil in the geopolitical situation still provides support for the price of gold, the strength of the US dollar and the prospect of interest rate hikes by the global central bank have made the gold bulls retreat, and there is still a certain risk of short-term decline in the price of gold. In addition, investors also need to pay attention to the impact of the Asian epidemic on market sentiment and commodities. If fears rise further, the price of gold may be dragged down by the short-term decline in commodities. Investors can refer to the trend of commodity and gold prices in March 2020 as a reference.
Technical analysts pointed out, "The daily chart of gold prices has begun to show signs of oversold, which may trigger some short-term rebounds, but may not reverse, gold prices still face challenges at the $1925-1935 level, but below this level, there is a possibility of a rebound . From historical experience, gold prices are likely to find buyers at lower levels.”
GMT+8 10:20, spot gold is now reported at $1900.70/oz.
Investors need to continue to pay attention to the situation in Russia and Ukraine and the news related to the new crown epidemic on this trading day. United Nations Secretary-General Guterres will travel to Moscow on Tuesday to meet with Putin, and hold a working meeting and lunch with Russian Foreign Minister Lavrov.
In terms of economic data, we need to pay attention to the performance of U.S. durable goods orders in March. At present, market expectations are relatively optimistic, and the data is biased towards negative gold prices before the data is released.
Basic main bear
[The U.S. dollar index once again refreshed a more than two-year high on Monday]
As the wave of risk aversion hit global markets, the U.S. dollar continued its gains on Monday, reaching a new high of 101.86 since March 2020, and was last at 101.76, up 0.7%, the largest one-day percentage gain since March 11.
As the Ukrainian war enters its third month, growing fears of a worsening outbreak in Asia have sent Chinese stocks tumbling and investors have dumped previously favored currencies such as the Australian dollar.
Joe Manimbo, senior market analyst at Western Union Business Solutions, said: “Given the bleak outlook for the world economy, coupled with the Fed’s increasingly hawkish rhetoric about sharp rate hikes to curb inflation, the dollar is gaining popularity. Adding to the risk-off sentiment, that helped the dollar to some extent.”
Rupert Rowling, market analyst at Kinesis Money, said the Fed is all but certain to raise interest rates in both May and June, and possibly in July, all of which are supporting the dollar, making dollar-denominated gold difficult for overseas buyers. more expensive
Raffi Boyadjian, chief investment strategist at XM, mentioned: "Investors have fled to the dollar and U.S. Treasuries rather than the traditional safe-haven gold. Although U.S. Treasury yields of various days fell across the board on Monday, they remained relatively high. , reflecting the Fed's expectation of a sharp rate hike in the coming months."
[Trader: Although the U.S. dollar index is technically overbought, further gains can still be expected]
The U.S. dollar index has risen just over 14% since January 2021 to a high of 101.86, and despite being overbought on the monthly, weekly and daily charts, some traders see a test of 2020 in sight. March high of 102.99.
(U.S. Dollar Index Annual Chart)
With the index fast approaching this level, the market will be looking for a higher bullish target. The 38.2% Fibonacci retracement of the decline from February 1985 to March 2008 (164.72 to 70.698) is at 106.61.
For those still looking for a bigger rally, another Fibonacci level (76.4%) from the July 2001-March 2008 dip (121.02 to 70.698) is at 109.14. But unless the dollar makes a sizeable correction first, that level could be out of reach; but the nature of the current broad dollar rally does have the potential to support further big gains.
The three major currencies in the dollar basket are struggling right now. Sterling, euro and yen weakened sharply, while the dollar continued to benefit from the Fed's hawkish policy bias.
[Survey: The cost of living crisis in the UK will seriously affect economic growth, the Bank of England is expected to raise interest rates next week]
Britain's cost of living crisis will have a severe impact on economic growth this year, a Reuters poll showed, but the Bank of England is still expected to raise interest rates next week, its fourth meeting in a row.
Inflation hit a 30-year high of 7.0% in March [nZRS0048VX], and a Reuters poll shows inflation will be higher this quarter, meaning British households face the biggest cost-of-living tightening since records began in the 1950s.
Russia’s invasion of Ukraine and China’s reimposition of lockdowns have exacerbated supply chain disruptions caused by the coronavirus, soaring energy bills and tax increases that have eroded consumers’ purchasing power.
When asked what impact the cost of living crisis would have on growth, 17 of 22 analysts said the impact would be severe. One said it was very serious, and only four said the impact would be moderate.
"The shock to real income was already brewing last autumn, but the scale of the problem we're seeing now is unimaginable," said Stefan Koopman of Rabobank.
In response to a separate question, more than half of respondents said it would take more than a year for the crisis to ease significantly.
British inflation is expected to hit 8.4 percent this quarter, more than four times the Bank of England's 2.0 percent target, and up from last month's forecast of 7.7 percent. Inflation will gradually ease over the next few quarters, but the final estimate shows that the target level will not be reached until the end of 2023.
Chart: UK Inflation and Monetary Policy Outlook
The Bank of England followed in the footsteps of other central banks in cutting interest rates to record lows in the early days of the Covid-19 pandemic, but started the current tightening cycle in December.
Of the 44 analysts surveyed between April 19-25, 33 believed the central bank would raise rates by 25 basis points to 1.00% at its May 5 meeting. Ten said rates would remain unchanged and one expected a 50 basis point hike.
The median forecast showed the Bank of England raising rates on May 5 by the same amount in the next quarter and early 2023, bringing the benchmark rate to 1.50% before remaining there in 2023.
Analysts, however, are clearly divided, with 10 expecting a lower rate at the end of 2022 than the median forecast of 1.25%, 17 expecting it to be at the same level and 20 expecting it to be higher. The highest estimate of the year-end interest rate level is 3.00%.
[Survey: Riksbank expected to raise interest rates by June, soaring inflation will force it to change course]
Sweden's central bank is likely to start raising interest rates by June and possibly even this week, a Reuters poll showed on Monday, as soaring inflation forces a sudden shift from its ultra-easy policy stance.
Riksbank has kept its benchmark interest rate at 0% since late 2019 and, based on its current policy path, does not expect any rise until the end of 2024, although several policymakers at the central bank have questioned that prospect.
Russia's invasion of Ukraine has exacerbated supply chain bottlenecks already strained by the coronavirus pandemic, pushing up fuel prices.
This has a knock-on effect on a basket of consumer goods, with Capital Economics senior economist David Oxley saying Sweden's interest rate path is now "significantly outdated".
Three of the 16 analysts polled, including Oxley, predicted the Riksbank would raise interest rates by 0.25% on Thursday. Two of the three said the Riksbank would raise interest rates again in June. Seven analysts forecast a first rate hike in June.
The policy rate will hit 1.00% by the end of 2023, according to the median forecast in the survey. The Riksbank is also expected to allow its balance sheet to start shrinking this year, another reversal from current policy.
Julius Baer analyst Carsten Menke said, “Fears of rate hikes seem to have prevailed recently, with our three-month price target of $1,850, we’ve always considered gold to be quite expensive as a safe-haven asset. We would think that inflationary pressures are about to ease. , which should take away some of the safe-haven demand for gold that we've seen."
Basic major bullish
[The United States will soon reopen the embassy in Ukraine, and the Russian-Ukrainian war continues to burn]
The U.S. will reopen its embassy in Ukraine and pledge more military aid, two senior officials from President Biden's administration said during a visit to Kyiv. At the same time, Russia warned Washington to stop supplying weapons to Ukraine as the war in eastern Ukraine continues.
Both U.S. Secretary of State Blinken and Defense Secretary Austin said their presence in the Ukrainian capital was a testament to Ukraine's tenacity in forcing Moscow to abandon its offensive on Kyiv last month. Russian Foreign Minister Sergei Lavrov said late Monday that the crisis would end with an agreement, but the content of the agreement would depend on the military situation. He criticized Kyiv for just pretending to be negotiating.
Earlier, Russia's ambassador to Washington demanded that the United States stop arms shipments, warning that large-scale arms shipments from the West had exacerbated the conflict.
The U.S. has pledged $713 million in new aid to Ukraine and other countries in the region deemed potentially vulnerable to Russian threats. The White House also warned of possible further sanctions on Russia.
With another $322 million in military aid to Ukraine, the total U.S. security assistance since Russia's invasion of Ukraine would reach about $3.7 billion, an official said
Russian President Vladimir Putin slammed the West on Monday for failing to divide Russian society and accused it of inciting Kyiv to plan attacks on Russian journalists. Ukrainian security services dismissed Putin's remarks.
Meanwhile, Ukraine's military command said Russia was trying to disrupt its allies' arms supply to Ukraine by bombing Ukraine's railway infrastructure.
The Russian Defense Ministry later said its missiles destroyed six railway facilities in the eastern Donbas region used to transport foreign weapons to Ukrainian troops.
Five train stations in western and central Ukraine were attacked on Monday, killing one person, Ukrainian TV said, citing the state-run Ukrainian Railways.
Outside the Ukrainian capital, the war continues in eastern and southern Ukraine, where Russia launched a massive offensive last week.
Dmitry Polyanskiy, Russia's first deputy permanent representative to the United Nations, said on Monday that a ceasefire in Ukraine does not make sense at this stage, as Kiev could use it as an opportunity to try to discredit Russia after it denied a deal with Moscow on a humanitarian corridor
About 15,000 Russian soldiers have been killed since the invasion began, British Defence Minister Wallace said, according to an update from The Guardian. Speaking to Parliament on Monday afternoon, he added that in addition to the death toll, 2,000 armoured vehicles were destroyed or captured, including 530 tanks. Russia is believed to have lost more than 60 helicopters and fighter jets.
Wallace also confirmed that the UK will send a small number of Tempest missile launchers to Ukraine, with the total military aid likely to rise to £500m. The UK has sent 5,361 NLAWs, 200 Javelins and will provide 250 Starstreak anti-aircraft missiles.
Russian Foreign Minister Sergei Lavrov warned in an interview with Russian media that there is still a "real" danger of a third world war. He also said the shipment of Western weapons to Ukraine meant that the NATO alliance was "essentially at war with Russia".
On the whole, although the turmoil in the geopolitical situation still provides support for the price of gold, the strength of the US dollar and the prospect of interest rate hikes by the global central bank have made the gold bulls retreat, and there is still a certain risk of short-term decline in the price of gold. In addition, investors also need to pay attention to the impact of the Asian epidemic on market sentiment and commodities. If fears rise further, the price of gold may be dragged down by the short-term decline in commodities. Investors can refer to the trend of commodity and gold prices in March 2020 as a reference.
Technical analysts pointed out, "The daily chart of gold prices has begun to show signs of oversold, which may trigger some short-term rebounds, but may not reverse, gold prices still face challenges at the $1925-1935 level, but below this level, there is a possibility of a rebound . From historical experience, gold prices are likely to find buyers at lower levels.”
GMT+8 10:20, spot gold is now reported at $1900.70/oz.
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