Gold trading reminder: U.S. dollar rises and falls, gold price rises slightly, waiting for CPI data to be released

On Tuesday (September 14) Asian time, spot gold price remained stable below 1800. On Monday (September 13), the price of gold rose slightly, supported by the rise and fall of the US dollar and the decline in U.S. Treasury yields. However, the rise in the stock market limited the growth of gold prices. As no important economic data was released on Monday, the market was relatively thin.

Fundamentals are bullish

[September 13 gold ETF holdings: SPDR gold holdings increased by 2.04 tons]

According to the data of gold ETFs on September 14th, as of September 13, the world's largest gold ETF-SPDR Gold Trust held 1,000.21 tons of gold, an increase of 2.04 tons from the previous trading day.

[The number of confirmed cases of new coronary pneumonia in the United States exceeds 160,000, with a total of more than 42 million cases]

According to Worldometer's real-time statistics, as of about 6:30 on September 14th, GMT+8, there were a total of 42013330 confirmed cases of new coronary pneumonia in the United States, and a total of 679287 deaths. Compared with the data at 6:30 the previous day, there were 160,842 new confirmed cases and 1,305 new deaths in the United States.

[The U.S. dollar index rises and falls]

The U.S. dollar hit a two-week high in intraday trading against major currencies, but gave up all gains late in the session. The United States will release a series of economic data this week, starting with the Consumer Price Index (CPI) released on Tuesday, which will provide the latest clues on the fever of inflation before the Federal Reserve meeting next week.

(Daily chart of the US dollar index)

Philadelphia Fed Chairman Hacker became the latest decision maker to express his hope that the Fed will begin to reduce debt purchases this year. In an interview with Nikkei, he said that he would like to reduce the scale of asset purchases.

Reducing the size of debt purchases usually boosts the U.S. dollar because it means a step toward tightening monetary policy. This also means that the Fed will reduce its purchases of bond assets, which means that there will be fewer U.S. dollars in circulation.

But before the CPI data was released, the market atmosphere was still quite cautious, and investors were unwilling to overestimate their expectations for CPI.

Fundamentals are bad

[Dow and S&P 500 both rose]

The U.S. stock market S&P 500 index and the Dow closed higher on Monday, ending the five consecutive days of decline. Investors are concerned about the possible increase in corporate tax rates and upcoming economic data.

Investors favor value stocks that will benefit the most from the economic recovery, rather than growth stocks, with the former recording the largest percentage gains.

Liz Young, head of investment strategy at SoFi, said: "There may not be too many surprises this month. We are experiencing another period of volatility. I believe that as the 10-year U.S. Treasury yield slowly rises before the end of the year, funds may turn around. Move back to cyclical stocks and stocks that have benefited from the economic restart."

The focus of market participants is that the US President Biden's $3.5 trillion spending bill may be passed, and it is expected that the bill will include an increase in the corporate tax rate from 21% to 26.5%.

Goldman Sachs analysts expect that the corporate tax rate will be raised to 25%, and the final rate of increase in the overseas profit tax rate will be half of the proposed rate. They estimate that this will lead to a 5% decline in the profits of S&P 500 index companies in 2022.

The Dow rose 0.76%, the S&P 500 rose 0.23%, and the Nasdaq fell 0.07%.

(Dow daily chart)

Data Preview

During the day, we will focus on the US August CPI.

The CPI is expected to maintain a year-on-year growth of 5.4% in August, which is one-tenth higher than market consensus . Although the main part of the accelerated price increase is over, the losses caused by the hurricane and the shortage of chips mean that inflation may be closer to the upper limit of the 5.0%-5.5% range in the coming months.

As salary growth increases and rework is still going on, a key factor that needs to be paid attention to is housing costs. It accounts for about one-third of the CPI, will grow moderately in 2021, and is expected to accelerate growth in 2022.

The overall CPI is expected to increase by 0.4% from the previous month, and the core CPI by 0.3% from the previous month. Although both are in line with expectations, we expect the unseasonally adjusted year-on-year data to reach 5.4%, which is generally expected to be 5.3%.

An analysis of the July CPI found that only 13% of the monthly increase was contributed by six low-weight reopening sensitive categories, which accounted for more than half of the average increase in the first three months.

Subsequent August PPI data shows that the increased pressure on price increases continues.

Gasoline prices adjusted for seasonal factors are expected to rise by about 3.7%, which is enough to increase the CPI by about 14 basis points from the previous month.

The high base effect will make CPI rise less than 2% in the second half of 2022. Inflation is expected to return to normalization in 2023 and approach the upper limit in the range of 2.0%-2.5%, and the Fed will then begin to raise the federal funds rate for the first time.

In general, the price of gold continues to trade sideways below 1900, and the technical outlook is still not good for the bulls, and the price of gold may continue to fall in the market outlook.

(Spot gold daily chart)

GMT+8 8:43, spot gold was quoted at $1,792.32 per ounce.