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Market News Gold trading reminder: The US dollar rushed higher and lowered and closed down! Gold prices recover this week's lost ground prospects are bullish
Gold trading reminder: The US dollar rushed higher and lowered and closed down! Gold prices recover this week's lost ground prospects are bullish
In the Asian session on January 18, spot gold held steady at around 1868. The price of gold rose by nearly 1% on Wednesday, as the US dollar and US stocks fell from their highs, but aggressive bets on interest rate hikes in the market will drag down the price of gold. Overall, the price of gold is still strong and is expected to continue to rise and challenge the 1900 mark.
2021-11-18
9365
On Thursday (November 18) Asian session, spot gold held steady at around 1868. On Wednesday (November 17), the price of gold rose by nearly 1%, as the US dollar and US stocks fell from their highs, but the market’s aggressive interest rate bets will drag down the price of gold.
Pay attention to the initial data and the speeches of Fed officials in the day. The number of initial requests may continue to decline, which is negative for gold prices.
[November 17 gold ETF holdings: SPDR gold holdings increased by 0.88 tons]
According to the data of gold ETFs on November 18, as of November 17, the world's largest gold ETF-SPDR Gold Trust held 975.99 tons of gold, an increase of 0.88 tons from the previous trading day.
[The U.S. dollar has fallen from a 16-month high as investors assess the prospects of future monetary policy]
The U.S. dollar fell from a 16-month high on Wednesday, and the euro is still on the defensive, as investors adjusted their bets on the central bank to raise interest rates amid rising price pressures. The Fed is expected to raise interest rates as early as mid-2022.
(Daily chart of the US dollar index)
The U.S. dollar index, which measures the U.S. dollar against a basket of six currencies, fell 0.10% to 95.846, having previously hit 96.266, the highest since mid-July 2020.
The U.S. dollar hit a four-and-a-half-year high against the yen and tested the $1.12 level against the euro. It was helped by strong US retail sales data and the hawkish remarks of the Fed’s policymakers, which contrasted sharply with the dovish remarks of the European Central Bank President.
Edward Moya, a senior market analyst at the foreign exchange brokerage company Oanda, said that the market is now beginning to understand that the subject matter of the foreign exchange market will diverge. I think the market is going through a period of turbulence, and you will continue to see the market's attention to inflation.
The current trend of the money market shows that the market has digested the possibility that the Fed will raise interest rates in June next year and then raise interest rates again in November. According to the Chicago Mercantile Exchange, the probability of a 25 basis point increase in interest rates by July 2022 is 50% .
Antje Praefcke, a foreign exchange strategist at Commerzbank, said that the market believes that the key interest rate will increase in the second half of next year . For me, the dollar is still a bargain-hunting purchase in the short term.
[The three major stock indexes closed lower, and the performance of large retailers triggered inflation concerns]
Major U.S. stock indexes closed lower on Wednesday. Inflation concerns and supply chain concerns triggered by retailer performance prompted investors to bet that the Fed would raise interest rates sooner than expected to curb rising prices.
(Dow daily chart)
Target is the latest big-name retailer to announce positive results. The company raised its annual financial forecast and its profit forecast exceeded expectations on the grounds that holiday shopping began early.
But the company’s share price plunged 4.7%, following the decline of its peer Wal-Mart. Both retailers said that supply chain issues hit third-quarter profit margins.
Other retailers that have not yet announced their results also fell. Macy's and Kohl's Department Store plunged 4.5% and 3.1%, respectively, and both will announce their results on Thursday morning. Gap and Urban Outfitters, which will announce their earnings next week, plunged 5.2% and 4.2%, respectively.
There are also retailers rising against the trend. TJX Companies rose 5.8%, setting the highest closing level since August 27. Earlier, the company announced profits that exceeded expectations and increased its share repurchase program. It also predicted that it would be in a favorable position to meet demand during the holiday season.
[Germany adds new diagnoses in a single day and makes new innovations, Merkel warns that the fourth wave of epidemics is coming]
The German disease control agency announced on the 17th that the number of newly diagnosed new crown virus infections was 52,826, once again setting the country's record for the number of new diagnoses in a single day since the outbreak.
German Chancellor Angela Merkel warned that the country’s epidemic situation is very severe and that the fourth wave of the epidemic has already hit.
Merkel called on the German states to determine an epidemic prevention alert value as soon as possible, and additional epidemic prevention measures should be taken after reaching this value to avoid overloading medical institutions.
She said that if you wait until the intensive care beds in the hospital are full before taking action, the consequences will be catastrophic.
[France newly diagnosed more than 20,000 in a single day, officially confirmed that it has entered the fifth wave of epidemic]
On the 17th local time, the number of new confirmed cases of new coronary pneumonia in France exceeded 20,000 in a single day, and the total number of confirmed cases reached 7.33 million.
French officials confirmed on the same day that France has entered the fifth wave of epidemics. According to official French data, there were 20,294 newly confirmed cases in a single day in France on the 17th, a new high since the end of August ; a total of 7,330,958 confirmed cases were confirmed. The cumulative number of deaths in France is now 118,321, with 50 new deaths.
The number of inpatients and severely ill patients with the new crown in France is still increasing. Among them, the number of inpatients is now 7,663 and the number of severely ill patients is 1,300.
French government spokesperson Attar held a press conference on the same day to report the situation of the epidemic on behalf of the official authorities, confirming that France has entered the fifth wave of epidemics, the epidemic situation is rebounding everywhere, and the new crown virus is continuing to spread. But he also said that the authorities are ready for the arrival of the fifth wave of the epidemic.
[Citigroup joins Morgan Stanley, betting that the Fed will raise interest rates more aggressively]
More and more Wall Street banks are betting that the Fed will raise interest rates faster than expected. Citigroup has also joined Morgan Stanley and is optimistic about trading strategies that can profit from the Fed's faster interest rate hikes.
The spread of Eurodollar futures, which closely follows the Fed’s policy interest rate outlook, is a popular bet on the Fed’s interest rate path.
On Wednesday, Citigroup analysts recommended a steeper transaction for June 2022/2025 Eurodollar futures. If this part of the yield curve reflects a larger interest rate premium, then the transaction will be profitable.
Morgan Stanley analysts support a similar trading strategy, but the goal is to steepen the contract in September 2022/December 2323.
The swap market pricing shows that the Fed’s June meeting raised interest rates by 18 basis points, which is equivalent to about 75% of the usual rate hikes each time. However, from then until the end of 2025, the rate of interest rate hikes indicated by market prices were only about 150 basis points, as opposed to six interest rate hikes.
Citigroup analysts said the interest rate hike path indicated by market pricing is too flat. Therefore, the bank launched a steepening transaction for the June 2022/2025 June contract at a price of 140 basis points, with a target of 240 basis points.
Citigroup strategist Jabaz Mathai said in a report that we believe that with the start of interest rate hikes, the curve may steepen because some uncertainties in the global economy, such as supply chain bottlenecks, will begin to dissipate.
[Institutional analysis: U.S. debt ceiling concerns return to the market, and U.S. bond yields due in mid-December rise]
Investors began to require higher yields to hold the shortest-term bonds of the US government, believing that if the debt ceiling is not suspended or raised in the next few weeks, the US government will face the risk of delays in repayment.
The yield of US Treasury bonds due on December 15 climbed 2.8 basis points to 0.083%, while the yields of most other Treasury bonds maturing around this time were lower.
Due to the uncertainty of timing, investors are relatively optimistic about the potential risk of default. Some strategists believe that there may be a default around the beginning of 2022, while others focus on the end of the year.
In general, the price of gold is still strong and is expected to continue to rise and challenge the 1900 mark.
(Spot gold daily chart)
GMT+8 8:45, spot gold was quoted at US$1,69.37 per ounce.
Pay attention to the initial data and the speeches of Fed officials in the day. The number of initial requests may continue to decline, which is negative for gold prices.
Fundamentals are bullish
[November 17 gold ETF holdings: SPDR gold holdings increased by 0.88 tons]
According to the data of gold ETFs on November 18, as of November 17, the world's largest gold ETF-SPDR Gold Trust held 975.99 tons of gold, an increase of 0.88 tons from the previous trading day.
[The U.S. dollar has fallen from a 16-month high as investors assess the prospects of future monetary policy]
The U.S. dollar fell from a 16-month high on Wednesday, and the euro is still on the defensive, as investors adjusted their bets on the central bank to raise interest rates amid rising price pressures. The Fed is expected to raise interest rates as early as mid-2022.
(Daily chart of the US dollar index)
The U.S. dollar index, which measures the U.S. dollar against a basket of six currencies, fell 0.10% to 95.846, having previously hit 96.266, the highest since mid-July 2020.
The U.S. dollar hit a four-and-a-half-year high against the yen and tested the $1.12 level against the euro. It was helped by strong US retail sales data and the hawkish remarks of the Fed’s policymakers, which contrasted sharply with the dovish remarks of the European Central Bank President.
Edward Moya, a senior market analyst at the foreign exchange brokerage company Oanda, said that the market is now beginning to understand that the subject matter of the foreign exchange market will diverge. I think the market is going through a period of turbulence, and you will continue to see the market's attention to inflation.
The current trend of the money market shows that the market has digested the possibility that the Fed will raise interest rates in June next year and then raise interest rates again in November. According to the Chicago Mercantile Exchange, the probability of a 25 basis point increase in interest rates by July 2022 is 50% .
Antje Praefcke, a foreign exchange strategist at Commerzbank, said that the market believes that the key interest rate will increase in the second half of next year . For me, the dollar is still a bargain-hunting purchase in the short term.
[The three major stock indexes closed lower, and the performance of large retailers triggered inflation concerns]
Major U.S. stock indexes closed lower on Wednesday. Inflation concerns and supply chain concerns triggered by retailer performance prompted investors to bet that the Fed would raise interest rates sooner than expected to curb rising prices.
(Dow daily chart)
Target is the latest big-name retailer to announce positive results. The company raised its annual financial forecast and its profit forecast exceeded expectations on the grounds that holiday shopping began early.
But the company’s share price plunged 4.7%, following the decline of its peer Wal-Mart. Both retailers said that supply chain issues hit third-quarter profit margins.
Other retailers that have not yet announced their results also fell. Macy's and Kohl's Department Store plunged 4.5% and 3.1%, respectively, and both will announce their results on Thursday morning. Gap and Urban Outfitters, which will announce their earnings next week, plunged 5.2% and 4.2%, respectively.
There are also retailers rising against the trend. TJX Companies rose 5.8%, setting the highest closing level since August 27. Earlier, the company announced profits that exceeded expectations and increased its share repurchase program. It also predicted that it would be in a favorable position to meet demand during the holiday season.
[Germany adds new diagnoses in a single day and makes new innovations, Merkel warns that the fourth wave of epidemics is coming]
The German disease control agency announced on the 17th that the number of newly diagnosed new crown virus infections was 52,826, once again setting the country's record for the number of new diagnoses in a single day since the outbreak.
German Chancellor Angela Merkel warned that the country’s epidemic situation is very severe and that the fourth wave of the epidemic has already hit.
Merkel called on the German states to determine an epidemic prevention alert value as soon as possible, and additional epidemic prevention measures should be taken after reaching this value to avoid overloading medical institutions.
She said that if you wait until the intensive care beds in the hospital are full before taking action, the consequences will be catastrophic.
[France newly diagnosed more than 20,000 in a single day, officially confirmed that it has entered the fifth wave of epidemic]
On the 17th local time, the number of new confirmed cases of new coronary pneumonia in France exceeded 20,000 in a single day, and the total number of confirmed cases reached 7.33 million.
French officials confirmed on the same day that France has entered the fifth wave of epidemics. According to official French data, there were 20,294 newly confirmed cases in a single day in France on the 17th, a new high since the end of August ; a total of 7,330,958 confirmed cases were confirmed. The cumulative number of deaths in France is now 118,321, with 50 new deaths.
The number of inpatients and severely ill patients with the new crown in France is still increasing. Among them, the number of inpatients is now 7,663 and the number of severely ill patients is 1,300.
French government spokesperson Attar held a press conference on the same day to report the situation of the epidemic on behalf of the official authorities, confirming that France has entered the fifth wave of epidemics, the epidemic situation is rebounding everywhere, and the new crown virus is continuing to spread. But he also said that the authorities are ready for the arrival of the fifth wave of the epidemic.
Fundamentals are bad
[Citigroup joins Morgan Stanley, betting that the Fed will raise interest rates more aggressively]
More and more Wall Street banks are betting that the Fed will raise interest rates faster than expected. Citigroup has also joined Morgan Stanley and is optimistic about trading strategies that can profit from the Fed's faster interest rate hikes.
The spread of Eurodollar futures, which closely follows the Fed’s policy interest rate outlook, is a popular bet on the Fed’s interest rate path.
On Wednesday, Citigroup analysts recommended a steeper transaction for June 2022/2025 Eurodollar futures. If this part of the yield curve reflects a larger interest rate premium, then the transaction will be profitable.
Morgan Stanley analysts support a similar trading strategy, but the goal is to steepen the contract in September 2022/December 2323.
The swap market pricing shows that the Fed’s June meeting raised interest rates by 18 basis points, which is equivalent to about 75% of the usual rate hikes each time. However, from then until the end of 2025, the rate of interest rate hikes indicated by market prices were only about 150 basis points, as opposed to six interest rate hikes.
Citigroup analysts said the interest rate hike path indicated by market pricing is too flat. Therefore, the bank launched a steepening transaction for the June 2022/2025 June contract at a price of 140 basis points, with a target of 240 basis points.
Citigroup strategist Jabaz Mathai said in a report that we believe that with the start of interest rate hikes, the curve may steepen because some uncertainties in the global economy, such as supply chain bottlenecks, will begin to dissipate.
[Institutional analysis: U.S. debt ceiling concerns return to the market, and U.S. bond yields due in mid-December rise]
Investors began to require higher yields to hold the shortest-term bonds of the US government, believing that if the debt ceiling is not suspended or raised in the next few weeks, the US government will face the risk of delays in repayment.
The yield of US Treasury bonds due on December 15 climbed 2.8 basis points to 0.083%, while the yields of most other Treasury bonds maturing around this time were lower.
Due to the uncertainty of timing, investors are relatively optimistic about the potential risk of default. Some strategists believe that there may be a default around the beginning of 2022, while others focus on the end of the year.
In general, the price of gold is still strong and is expected to continue to rise and challenge the 1900 mark.
(Spot gold daily chart)
GMT+8 8:45, spot gold was quoted at US$1,69.37 per ounce.
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