English
Market News Gold trading reminder: US stocks have plummeted due to the Fed's decision, gold bulls are proud
Gold trading reminder: US stocks have plummeted due to the Fed's decision, gold bulls are proud
During the Asian session on September 21, spot gold held steady at around 1764. As the Fed was about to enter the interest rate meeting, market risk aversion suddenly heated up, US stocks plummeted, gold prices bottomed out, and the bulls ushered in a respite.
2021-09-21
9463
On Tuesday (September 21) Asian session, spot gold held steady at around 1764. On Monday (September 20), the price of gold rose slightly. Investors became more worried about the Federal Reserve's monetary stimulus. The US stock market fell by more than 2%. The U.S. dollar rose to its highest level in nearly a month, and U.S. Treasury yields fell, boosting demand for non-interest-bearing asset gold.
The main focus of the day is the August construction permits and new housing starts data in the United States.
[S&P 500 index hits the biggest drop in 4 months]
The U.S. stock market recorded its biggest decline in about four months. Investors' concerns about U.S. debt and the prospect of the Fed's downsizing have triggered a plunge in global stock markets.
The Nasdaq index hit its lowest in about a month, but the three major stock indexes regained some of their losses before the close, and the closing level was far from the daily low. The Nasdaq fell more than 3% in intraday trading.
The S&P 500 index's closing decline narrowed to 1.7%, and traders bought on dips again after the index rebounded from the closely watched moving average.
The results of the Fed’s policy meeting will be announced on Wednesday. It is expected that the Fed will pave the way for the reduction of quantitative easing at the meeting, although the market’s general expectation is to truly announce that it will be postponed to the November or December meeting.
Morgan Stanley strategists said that as the Fed begins to reduce monetary support, they expect a 10% correction in the S&P 500, and said signs of stagnant economic growth may extend the correction to 20%.
The Dow closed 1.8% lower, the S&P 500 index closed down 1.7%, and the Nasdaq closed down 2.2%
(S&P 500 daily chart)
[The death toll from the new crown in the United States exceeds the flu pandemic a hundred years ago]
The death toll from the American pandemic surpassed that of the 1918 influenza pandemic on Monday, and many experts said that this situation could have been avoided after the vaccine was successfully developed.
According to data from Johns Hopkins University in the United States, as of 5:21 am on September 21, GMT+8, a total of 42,255,382 cases of new coronary pneumonia have been confirmed in the United States, and the total number of deaths due to new coronary pneumonia has reached 675,885, which is more than a century. The pre-influenza pandemic estimated the death toll of 675,000 people . Compared with the two data 24 hours ago, 170,162 newly diagnosed cases and 2124 new deaths were added.
[The European Central Bank will maintain easing policies]
Francois Villeroy de Galhau, President of the Bank of France, said that due to supply chain difficulties and high oil and raw material prices, inflation has experienced a temporary spike.
"Now that the inflation rate is temporarily higher than the 2% target, I want to emphasize that this is temporary," he said in a question-and-answer session after a speech at the Institute de France in Paris.
"The euro area may discuss how long these supply chain bottlenecks will last, and thus make the closest prediction to the decimal point of the inflation rate. However, I want to be clear: the euro area inflation rate will undoubtedly be between now and 2023. Back below the 2% target. This is especially true for core inflation excluding energy. Based on this, there is no doubt that we must maintain loose monetary policy ."
[The scale of the Fed's use of reverse repurchase overnight hits a record high]
Due to the surplus of funds in the US interest rate market, the Fed's use of reverse repurchase overnight unexpectedly climbed to a record high.
On Monday, 77 institutions used the Fed's overnight reverse repurchase agreement to reach $1.224 trillion, surpassing the previous record of $1.218 trillion on September 17 . Through the Fed's overnight reverse repurchase facility, counterparties such as money market funds can deposit cash in the central bank.
Since the Federal Reserve raised the overnight reverse repo rate from 0% to 0.05% last month, the demand for overnight reverse repo tools has surged. This is partly due to the central bank’s asset purchases and the shrinking of the cash account of the Ministry of Finance, and also because the Ministry of Finance continues to reduce the supply of short-term bonds in order not to exceed the debt ceiling.
[Risk aversion warming up, the dollar rises]
The U.S. dollar index rose and fell, closing at a new high in the past month. As the US stock market plummeted, market risk aversion rose sharply. Investors were worried about the US debt ceiling and the prospect of the Federal Reserve's cuts.
(Daily chart of the US dollar index)
U.S. Treasury Secretary Yellen warned again last weekend that if the U.S. Congress does not quickly raise the federal government’s debt ceiling or suspend its effectiveness, the federal government may default on its debt in October this year and cause widespread "economic disaster."
She said that the US government debt default is likely to trigger a "historical financial crisis" and aggravate the economic damage caused by the new crown epidemic; debt defaults may also trigger a surge in interest rates, a sharp drop in stock prices and other financial turmoil. In addition, the current US economic recovery may be reversed into recession, losing billions of dollars in economic growth and millions of jobs.
Art Hogan, chief market strategist at National Securities, said that anxiety about the debt ceiling has increased investor concerns about the new crown variant virus, inflation and the end of the Fed’s easing policy.
Hogan added that September is usually an unstable month for the market, and 2021 is no exception. He said: “When we think about what is driving the market, we have already felt that we have shifted from complacency to concern about a large number of potential risks. Look at it from the perspective of the boom month."
In general, although gold prices bottomed out on Monday, the overall pattern is still biased towards the short side, and there is still greater downward pressure in the market outlook.
(Spot gold daily chart)
GMT+8 9:44, spot gold was quoted at US$1,763.63 per ounce.
The main focus of the day is the August construction permits and new housing starts data in the United States.
Fundamentals are bullish
[S&P 500 index hits the biggest drop in 4 months]
The U.S. stock market recorded its biggest decline in about four months. Investors' concerns about U.S. debt and the prospect of the Fed's downsizing have triggered a plunge in global stock markets.
The Nasdaq index hit its lowest in about a month, but the three major stock indexes regained some of their losses before the close, and the closing level was far from the daily low. The Nasdaq fell more than 3% in intraday trading.
The S&P 500 index's closing decline narrowed to 1.7%, and traders bought on dips again after the index rebounded from the closely watched moving average.
The results of the Fed’s policy meeting will be announced on Wednesday. It is expected that the Fed will pave the way for the reduction of quantitative easing at the meeting, although the market’s general expectation is to truly announce that it will be postponed to the November or December meeting.
Morgan Stanley strategists said that as the Fed begins to reduce monetary support, they expect a 10% correction in the S&P 500, and said signs of stagnant economic growth may extend the correction to 20%.
The Dow closed 1.8% lower, the S&P 500 index closed down 1.7%, and the Nasdaq closed down 2.2%
(S&P 500 daily chart)
[The death toll from the new crown in the United States exceeds the flu pandemic a hundred years ago]
The death toll from the American pandemic surpassed that of the 1918 influenza pandemic on Monday, and many experts said that this situation could have been avoided after the vaccine was successfully developed.
According to data from Johns Hopkins University in the United States, as of 5:21 am on September 21, GMT+8, a total of 42,255,382 cases of new coronary pneumonia have been confirmed in the United States, and the total number of deaths due to new coronary pneumonia has reached 675,885, which is more than a century. The pre-influenza pandemic estimated the death toll of 675,000 people . Compared with the two data 24 hours ago, 170,162 newly diagnosed cases and 2124 new deaths were added.
[The European Central Bank will maintain easing policies]
Francois Villeroy de Galhau, President of the Bank of France, said that due to supply chain difficulties and high oil and raw material prices, inflation has experienced a temporary spike.
"Now that the inflation rate is temporarily higher than the 2% target, I want to emphasize that this is temporary," he said in a question-and-answer session after a speech at the Institute de France in Paris.
"The euro area may discuss how long these supply chain bottlenecks will last, and thus make the closest prediction to the decimal point of the inflation rate. However, I want to be clear: the euro area inflation rate will undoubtedly be between now and 2023. Back below the 2% target. This is especially true for core inflation excluding energy. Based on this, there is no doubt that we must maintain loose monetary policy ."
Fundamentals are bad
[The scale of the Fed's use of reverse repurchase overnight hits a record high]
Due to the surplus of funds in the US interest rate market, the Fed's use of reverse repurchase overnight unexpectedly climbed to a record high.
On Monday, 77 institutions used the Fed's overnight reverse repurchase agreement to reach $1.224 trillion, surpassing the previous record of $1.218 trillion on September 17 . Through the Fed's overnight reverse repurchase facility, counterparties such as money market funds can deposit cash in the central bank.
Since the Federal Reserve raised the overnight reverse repo rate from 0% to 0.05% last month, the demand for overnight reverse repo tools has surged. This is partly due to the central bank’s asset purchases and the shrinking of the cash account of the Ministry of Finance, and also because the Ministry of Finance continues to reduce the supply of short-term bonds in order not to exceed the debt ceiling.
[Risk aversion warming up, the dollar rises]
The U.S. dollar index rose and fell, closing at a new high in the past month. As the US stock market plummeted, market risk aversion rose sharply. Investors were worried about the US debt ceiling and the prospect of the Federal Reserve's cuts.
(Daily chart of the US dollar index)
U.S. Treasury Secretary Yellen warned again last weekend that if the U.S. Congress does not quickly raise the federal government’s debt ceiling or suspend its effectiveness, the federal government may default on its debt in October this year and cause widespread "economic disaster."
She said that the US government debt default is likely to trigger a "historical financial crisis" and aggravate the economic damage caused by the new crown epidemic; debt defaults may also trigger a surge in interest rates, a sharp drop in stock prices and other financial turmoil. In addition, the current US economic recovery may be reversed into recession, losing billions of dollars in economic growth and millions of jobs.
Art Hogan, chief market strategist at National Securities, said that anxiety about the debt ceiling has increased investor concerns about the new crown variant virus, inflation and the end of the Fed’s easing policy.
Hogan added that September is usually an unstable month for the market, and 2021 is no exception. He said: “When we think about what is driving the market, we have already felt that we have shifted from complacency to concern about a large number of potential risks. Look at it from the perspective of the boom month."
In general, although gold prices bottomed out on Monday, the overall pattern is still biased towards the short side, and there is still greater downward pressure in the market outlook.
(Spot gold daily chart)
GMT+8 9:44, spot gold was quoted at US$1,763.63 per ounce.
Bonus rebate to help investors grow in the trading world!
Or try Free Demo Trading
