Gold trading reminder: The U.S. dollar hits a one-year high, and the price of gold hits a low of nearly one thousand seven

On Thursday (September 30) Asian session, spot gold price rebounded slightly, trading around 1729. On Wednesday (September 29), the price of gold rose and fell, because the US dollar rose and the market expected that the Fed might soon begin to reduce economic support measures, but longer-lasting inflation expectations may bring support to gold prices.

In the day, we will focus on the number of initial jobless claims last week and the final value of US GDP in the second quarter.

Fundamentals are bad

[Philadelphia Federal Reserve Chairman expects the code reduction will start soon]

Philadelphia Federal Reserve Chairman Hack said, "I think it will soon be time to gradually start to reduce debt purchases, and we will slowly reduce the size of bond purchases of US$120 billion per month."

"These asset purchases are necessary to keep the market operating during a severe crisis. But as far as the labor market is concerned, the current problem lies on the supply side, not the demand side."

"After we reduce the size of asset purchases, we can start to consider raising the federal funds rate. But I don't expect to raise the benchmark interest rate before the end of next year or early 2023."

He said that given that more than half of the people in the United States have been vaccinated, there is reason to believe that the current epidemic will be "easier to overcome than in the past."

"Downside risks include continuing supply chain problems or another outbreak of the epidemic. In the short term, if Congress does not raise the debt ceiling, it may severely harm economic growth."

[U.S. second-hand housing contract volume rebounded to a seven-month high in August]

A measure of U.S. second-hand housing contracting volume rebounded to a seven-month high in August, as potential buyers welcomed more attractive prices and more inventory.

According to data released by the National Association of Realtors on Wednesday, the second-hand housing contract volume index increased by 8.1% from the previous month to 119.5, the first increase in three months. Economists surveyed expected a median increase of 1.4%.

The above data shows that the housing market activity is strengthening, after it has fallen from last year's record high. Historically low loan interest rates, slower house price growth and increased housing prices may reinvigorate demand that has weakened this year.

Lawrence Yun, chief economist of the National Association of Real Estate Brokers, said in a statement: “Increases in inventory and easing price conditions are prompting buyers to return to the market. However, buyers’ ability to pay is still facing challenges, because the increase in house prices is about the increase in wages. three times."

[The U.S. dollar hits a one-year high, not affected by the deadlock in the US debt ceiling negotiations]

The U.S. dollar hit a one-year high against major currencies on Wednesday as the market increasingly expects the Fed to reduce its asset purchases from November and may raise interest rates by the end of 2022.

(Daily chart of the US dollar index)

The U.S. dollar has performed well, although Washington is deadlocked over the US debt ceiling, which may cause the government to shut down.

As the world’s largest reserve currency, the U.S. dollar is seen as a safe-haven bet when market pressures are high. The U.S. dollar has strengthened in recent days as investors have turned their attention to the global economic slowdown, rising energy prices and U.S. Treasury yields. Worries that have risen sharply. Traders are also worried that the Fed will begin to withdraw policy support at a time when global growth slows.

Kit Juckes, a macro strategist at Societe Generale Bank, wrote in his latest research report, “The Federal Reserve has fired the starting gun for the normalization of monetary policy.”

He added: "As the United States breaks out of the zero interest rate range and leaves the Eurozone and Japan behind, excess global savings will inevitably be attracted to the US dollar. The US dollar may outperform most other currencies in the next year, and this trend may be possible. Start earlier than we expected."

Fundamentals are bullish

[Most of Citi's institutional clients worry about persistent inflation]

Citi’s survey of institutional clients shows that most investors are worried about persistently high inflation, believing that the probability of a 20% drop in US stocks is greater than a 20% rise.

According to a survey of more than 90 pension funds, mutual funds and hedge funds this month, although most people expect the S&P 500 Index to rise moderately next year, price pressures and the Fed’s policy reversal pose a major risk to the stock index.

Nearly 60% of respondents are preparing for "persistent" inflation, and only 23% of respondents believe that inflation is "temporary." Most agencies predict that the Fed will raise interest rates in the second half of 2022 or the first half of 2023.

This is a worrying factor for investors who are looking to profit from the stock index, and it is bad news for bondholders. As U.S. stocks fell and U.S. bond yields soared, those institutions that adhere to the traditional 60/40 equity bond allocation strategy have suffered their biggest losses in nearly a year this month.

Citigroup customers expect the 10-year U.S. Treasury bond yield to exceed 2% in 2022, and this month has risen by 20 basis points to about 1.5%.

They set an average target of 4630 points for the S&P 500 in December 2022, and a target of 4487 points for the end of this year.

According to the survey conducted on September 14-22, the median cash assets of these institutional clients are 5%, which is consistent with the long-term average.

[Major central bank governors say that the disruption of the global supply chain may worsen, and high inflation may be more lasting]

The world’s major central bank governors warned on Wednesday that supply constraints that hinder global economic growth may still worsen, keeping inflation high for a longer period of time, even if the current price surge may still be temporary.

The impact of the epidemic on the global economy has disrupted supply chains on all continents, leading to shortages of a series of goods and services around the world, including auto parts and microchips, as well as shipping container ships.

Fed Chairman Powell said at a meeting, “Seeing that bottlenecks and supply chain issues have not improved... This is frustrating, and in fact it has clearly deteriorated.”

Powell said at the European Central Bank’s central bank forum, “We think this situation may continue into next year and make inflation last longer than we expected.”

European Central Bank President Lagarde also expressed similar concerns on the same occasion. She said that economists had thought that these bottlenecks would disappear in a few weeks, but it is still uncertain.

She said: "We have experienced supply bottlenecks and supply chain disruptions for several months...This situation seems to continue, and it is still accelerating in some areas. I am thinking of shipping, cargo handling and other areas."

In general, the downward trend of gold prices continues, and it is recommended that the bulls temporarily leave the market and wait and see.

(Spot gold daily chart)

GMT+8 8:37, spot gold was quoted at $1,729.55 per ounce.