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Market News Gold trading reminder: There is no suspense about Powell's re-election, and the price of gold may fall by a thousand or eight barriers!
Gold trading reminder: There is no suspense about Powell's re-election, and the price of gold may fall by a thousand or eight barriers!
In the Asian session on November 23, spot gold was trading around 1810. The price of gold plummeted by more than 2% on Monday. As Biden nominated Powell for re-election as the chairman of the Federal Reserve, the dollar rose sharply. The market as a whole is expected to raise interest rates next year. The gold price may fall below 1,800 again.
2021-11-23
8037
On Tuesday (November 23) Asian time, spot gold was trading around 1810. On Monday (November 22), the price of gold plummeted by more than 2%. As Biden nominated Powell for re-election as the chairman of the Federal Reserve, the dollar rose sharply, and the price of gold fell under pressure. The market as a whole has advanced expectations for an interest rate hike next year.
In the day, we will mainly focus on the Markit Manufacturing PMI in the United States in November and Biden's speech on combating inflation.
[Biden nominates Powell for re-election as chairman of the Federal Reserve]
U.S. President Biden nominated Fed Chairman Powell for a re-election on Monday for a four-year term. The former investment banker will continue to carry out the most important monetary policy reforms since the 1970s and complete the task of leading the economy out of the pandemic crisis.
The White House said that Fed Governor Brainard will serve as vice chairman.
The market now expects that by the time of the policy meeting in June next year, the Fed will raise interest rates by 25 basis points, and will raise interest rates sooner in the future.
Kathy Jones, chief fixed-income strategist at Charles Schwab, said on Monday that after Powell's re-election nomination, "the market is paying attention to the possibility of the Federal Reserve's accelerated cuts and the first rate hike earlier."
"We have gone from a stalled economy to an economy that leads global economic growth," Biden said in a speech with the nominees at the White House.
Biden pointed out that Powell's "stable leadership" has calmed the panic market, and he believes that monetary policy can support full employment. "I believe Powell is the right person to help us tide over the difficulties."
Strategists pointed out that gold fell below the technical level of about 1835 US dollars, which is the key support threshold for gold, and may be one of the reasons for the accelerated selling on Monday.
Edward Moya, senior market analyst at Oanda, wrote in a daily report that the US stock market set a new high and after President Biden nominated Powell for re-election as the chairman of the Federal Reserve, the dollar soared, which punished gold.
[The U.S. dollar refreshed its 16-month high again]
The U.S. dollar hit a 16-month high on Monday. Prior to that, US President Biden nominated Powell to be re-elected as the chairman of the Federal Reserve for a four-year term. The euro was affected by the lockdown measures related to the epidemic.
(Daily chart of the US dollar index)
Western Union Business Solutions senior market analyst Joe Manimbo said, "Powell's re-election nominations shows that the outlook for monetary policy is not as dovish as under Brainard's leadership."
Manimbo added, “It seems that under Powell’s leadership, there is more room for interest rate hikes in the United States. Powell continues to serve as the chairman of the Federal Reserve, which is generally positive for the dollar.”
The minutes of the Fed’s meeting earlier this month will be released on Wednesday and may provide more information on how many policymakers are considering speeding up cuts or raising interest rates earlier.
[Former US Treasury Secretary Summers urges the Fed to start raising interest rates as soon as possible after the New Year]
Former U.S. Treasury Secretary Larry Summers said that in order to prevent inflation from getting out of control, the Fed should put the brakes on economic stimulus measures earlier than expected and start raising interest rates in early 2022.
Summers said in an interview with David Westin on Bloomberg TV: "I will hope to complete the entire code reduction in about three months, and if the situation continues, I will look forward to a very realistic possibility, that is Don't raise interest rates too long after the New Year."
The Harvard economist also said that if it were him, the purchase of mortgage-backed securities would be ended "almost immediately" because the plan caused inflation in the real estate market.
Summers was the Secretary of the Treasury of the Clinton Administration and later led President Obama's National Economic Council. He has been criticizing the expansionary economic policies of the Biden administration for causing inflation to rise.
[U.S. second-hand housing sales unexpectedly increased in October, reaching a nine-month high]
Second-hand housing sales in the United States unexpectedly increased to the highest level since the beginning of the year in October, indicating healthy demand, as more buyers are taking advantage of strong job growth and low mortgage interest rates.
According to data released by the National Association of Realtors (NAR) on Monday, second-hand housing sales rose 0.8% to 6.34 million units in October. The median estimate of surveyed economists is 6.2 million sets.
Although this data has fallen from the 14-year high reached a year ago, it is still much higher than the pre-epidemic level. This year's sales are expected to exceed 6 million sets, which will be the strongest level since 2006.
The median price of second-hand housing rose by more than 13% year-on-year to US$353,900 in October, from US$35,1200 last month.
Housing inventory was 1.25 million units, a decrease of 12% over the same period last year. At the current rate, it can be sold for 2.4 months.
[The Nasdaq and S&P 500 index set record highs during the session, but both closed lower in late trading]
The S&P 500 index closed down on Monday, and the Nasdaq index fell sharply. After announcing that Fed Chairman Powell was nominated for the second term, both set record highs. In the end, only the Dow Jones Industrial Index closed slightly higher.
"The market is very tight. We know that Powell can stay, but it does not help the inflation problem," said Dennis Dick, a trader at Bright Trading LLC. It was also suppressed in the late game."
Powell's nomination has been welcomed by many investors, who hope that there will be no major changes as the Fed guides the economy to recover from the epidemic. The Fed will return to its pre-epidemic policy before the end of 2022.
Randy Frederick, General Manager of Trading and Derivatives of Texas Schwab, said: "The market likes predictability...Although Brainard may be a good choice, the market does not know what to expect of her. Even if people generally think it means lower interest rates for a longer period of time."
The Dow Jones Industrial Average rose 0.05%, while the Standard & Poor's 500 Index fell 0.32%, and the Nasdaq Index fell 1.26%.
(Nasdaq daily chart)
[The epidemic in Europe is severe, and countries are constantly preparing to blockade]
German Chancellor Angela Merkel said that the latest round of the epidemic caused by the virus is worse than Germany has experienced so far, and called for more restrictive measures to curb the spread of the virus.
According to a person familiar with the matter, Merkel told CDU officials on Monday that the situation is very serious and warned that unless the fourth round of the epidemic can be resolved, the hospital will soon be overwhelmed.
The Merkel government has increased the pressure to require people to be vaccinated and announced that it intends to restrict those who have not received the vaccine from participating in many leisure activities. In contrast, Belgium has re-implemented mandatory telecommuting regulations while keeping nightclubs open.
Slovakia, a member of the European Union, is considering the possibility of a three-week blockade. Neighboring Austria has taken similar measures due to the rise in the number of new crown-related deaths and new infections.
As EU countries have adopted various response measures to combat the latest round of the epidemic, the EU will discuss how to update its vaccination digital certificates and how to manage travel within and outside the EU.
Overall, Powell will be re-elected as chairman of the Fed without any suspense. This dropped a deep-water bomb on the otherwise calm capital market on Monday. Expectations that the Fed will tighten monetary policy more quickly rose sharply, which caused the US dollar to rise sharply while US stocks fell. In addition, the renewed epidemic has affected the market's risk aversion sentiment, helping to enhance the attractiveness of safe-haven gold. After the price of gold plummeted on Monday, the market turned from long to short, and the market outlook may fall below 1800 again.
(Spot gold daily chart)
GMT+8 8:54, spot gold was quoted at US$1809.50 per ounce.
In the day, we will mainly focus on the Markit Manufacturing PMI in the United States in November and Biden's speech on combating inflation.
Fundamentals are bad
[Biden nominates Powell for re-election as chairman of the Federal Reserve]
U.S. President Biden nominated Fed Chairman Powell for a re-election on Monday for a four-year term. The former investment banker will continue to carry out the most important monetary policy reforms since the 1970s and complete the task of leading the economy out of the pandemic crisis.
The White House said that Fed Governor Brainard will serve as vice chairman.
The market now expects that by the time of the policy meeting in June next year, the Fed will raise interest rates by 25 basis points, and will raise interest rates sooner in the future.
Kathy Jones, chief fixed-income strategist at Charles Schwab, said on Monday that after Powell's re-election nomination, "the market is paying attention to the possibility of the Federal Reserve's accelerated cuts and the first rate hike earlier."
"We have gone from a stalled economy to an economy that leads global economic growth," Biden said in a speech with the nominees at the White House.
Biden pointed out that Powell's "stable leadership" has calmed the panic market, and he believes that monetary policy can support full employment. "I believe Powell is the right person to help us tide over the difficulties."
Strategists pointed out that gold fell below the technical level of about 1835 US dollars, which is the key support threshold for gold, and may be one of the reasons for the accelerated selling on Monday.
Edward Moya, senior market analyst at Oanda, wrote in a daily report that the US stock market set a new high and after President Biden nominated Powell for re-election as the chairman of the Federal Reserve, the dollar soared, which punished gold.
[The U.S. dollar refreshed its 16-month high again]
The U.S. dollar hit a 16-month high on Monday. Prior to that, US President Biden nominated Powell to be re-elected as the chairman of the Federal Reserve for a four-year term. The euro was affected by the lockdown measures related to the epidemic.
(Daily chart of the US dollar index)
Western Union Business Solutions senior market analyst Joe Manimbo said, "Powell's re-election nominations shows that the outlook for monetary policy is not as dovish as under Brainard's leadership."
Manimbo added, “It seems that under Powell’s leadership, there is more room for interest rate hikes in the United States. Powell continues to serve as the chairman of the Federal Reserve, which is generally positive for the dollar.”
The minutes of the Fed’s meeting earlier this month will be released on Wednesday and may provide more information on how many policymakers are considering speeding up cuts or raising interest rates earlier.
[Former US Treasury Secretary Summers urges the Fed to start raising interest rates as soon as possible after the New Year]
Former U.S. Treasury Secretary Larry Summers said that in order to prevent inflation from getting out of control, the Fed should put the brakes on economic stimulus measures earlier than expected and start raising interest rates in early 2022.
Summers said in an interview with David Westin on Bloomberg TV: "I will hope to complete the entire code reduction in about three months, and if the situation continues, I will look forward to a very realistic possibility, that is Don't raise interest rates too long after the New Year."
The Harvard economist also said that if it were him, the purchase of mortgage-backed securities would be ended "almost immediately" because the plan caused inflation in the real estate market.
Summers was the Secretary of the Treasury of the Clinton Administration and later led President Obama's National Economic Council. He has been criticizing the expansionary economic policies of the Biden administration for causing inflation to rise.
[U.S. second-hand housing sales unexpectedly increased in October, reaching a nine-month high]
Second-hand housing sales in the United States unexpectedly increased to the highest level since the beginning of the year in October, indicating healthy demand, as more buyers are taking advantage of strong job growth and low mortgage interest rates.
According to data released by the National Association of Realtors (NAR) on Monday, second-hand housing sales rose 0.8% to 6.34 million units in October. The median estimate of surveyed economists is 6.2 million sets.
Although this data has fallen from the 14-year high reached a year ago, it is still much higher than the pre-epidemic level. This year's sales are expected to exceed 6 million sets, which will be the strongest level since 2006.
The median price of second-hand housing rose by more than 13% year-on-year to US$353,900 in October, from US$35,1200 last month.
Housing inventory was 1.25 million units, a decrease of 12% over the same period last year. At the current rate, it can be sold for 2.4 months.
Fundamentals are bullish
[The Nasdaq and S&P 500 index set record highs during the session, but both closed lower in late trading]
The S&P 500 index closed down on Monday, and the Nasdaq index fell sharply. After announcing that Fed Chairman Powell was nominated for the second term, both set record highs. In the end, only the Dow Jones Industrial Index closed slightly higher.
"The market is very tight. We know that Powell can stay, but it does not help the inflation problem," said Dennis Dick, a trader at Bright Trading LLC. It was also suppressed in the late game."
Powell's nomination has been welcomed by many investors, who hope that there will be no major changes as the Fed guides the economy to recover from the epidemic. The Fed will return to its pre-epidemic policy before the end of 2022.
Randy Frederick, General Manager of Trading and Derivatives of Texas Schwab, said: "The market likes predictability...Although Brainard may be a good choice, the market does not know what to expect of her. Even if people generally think it means lower interest rates for a longer period of time."
The Dow Jones Industrial Average rose 0.05%, while the Standard & Poor's 500 Index fell 0.32%, and the Nasdaq Index fell 1.26%.
(Nasdaq daily chart)
[The epidemic in Europe is severe, and countries are constantly preparing to blockade]
German Chancellor Angela Merkel said that the latest round of the epidemic caused by the virus is worse than Germany has experienced so far, and called for more restrictive measures to curb the spread of the virus.
According to a person familiar with the matter, Merkel told CDU officials on Monday that the situation is very serious and warned that unless the fourth round of the epidemic can be resolved, the hospital will soon be overwhelmed.
The Merkel government has increased the pressure to require people to be vaccinated and announced that it intends to restrict those who have not received the vaccine from participating in many leisure activities. In contrast, Belgium has re-implemented mandatory telecommuting regulations while keeping nightclubs open.
Slovakia, a member of the European Union, is considering the possibility of a three-week blockade. Neighboring Austria has taken similar measures due to the rise in the number of new crown-related deaths and new infections.
As EU countries have adopted various response measures to combat the latest round of the epidemic, the EU will discuss how to update its vaccination digital certificates and how to manage travel within and outside the EU.
Overall, Powell will be re-elected as chairman of the Fed without any suspense. This dropped a deep-water bomb on the otherwise calm capital market on Monday. Expectations that the Fed will tighten monetary policy more quickly rose sharply, which caused the US dollar to rise sharply while US stocks fell. In addition, the renewed epidemic has affected the market's risk aversion sentiment, helping to enhance the attractiveness of safe-haven gold. After the price of gold plummeted on Monday, the market turned from long to short, and the market outlook may fall below 1800 again.
(Spot gold daily chart)
GMT+8 8:54, spot gold was quoted at US$1809.50 per ounce.
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