Gold trading reminder: Wall Street has little interest in gold, and gold prices are expected to continue sideways
In the Asian session on September 13, spot gold held steady at around 1786. The survey showed that Wall Street analysts' bullish sentiment on the price of gold this week has significantly cooled down, and the price of gold is expected to continue to fluctuate.

On Monday (September 13) Asian session, spot gold held steady at around 1786. Last Friday (September 13), the price of gold fell slightly, dragged down by the strengthening of the U.S. dollar and the Fed’s expectation of reducing bond purchases during the year, but the stock market’s plunge has a certain supportive effect on gold prices.
This week, I will focus on important data such as CPI, retail sales, initial applications, and consumer confidence in the United States in August.
Fundamentals are bad
[U.S. producer prices rose more than expected in August]
Due to continued disruptions in the supply chain, which pushed up production costs, the US producer price index rose more than expected in August.
According to data released by the US Department of Labor on Friday, the producer price index for final demand in August increased by 0.7% month-on-month, a record high of 8.3% year-on-year. Excluding volatile food and energy, the so-called core PPI rose 0.6% month-on-month and 6.7% year-on-year.
From raw material shortages and transportation bottlenecks to rising labor costs, the entire production process faces various challenges, pushing up the costs of manufacturers. In recent months, many companies have passed on these additional costs to consumers by raising prices, further exacerbating consumer inflation.
The PPI report shows that commodity prices rose by 1% and 0.6% in the previous month, while service costs rose by 0.7%.
The US will release a consumer price index report this week. The CPI is expected to increase by 0.4% month-on-month and 5.3% year-on-year.
Producer prices excluding food, energy and trade services rose 0.3% month-on-month and 6.3% year-on-year. Because it eliminates the volatile components, this indicator is usually favored by economists.
[The Federal Reserve may announce a reduction during the year]
The Fed is unlikely to announce at this month's meeting when it will begin to reduce the scale of asset purchases, but it is still expected to begin this year.
Before entering the period of silence, Fed officials’ speeches showed that the delta strain did not shake their minds. They supported Chairman Powell’s message on August 27 that it may start to reduce the code later this year. The growth rate of non-agricultural employment last month slowed down due to the impact of the epidemic.
Cleveland Federal Reserve Chairman Meester said on Friday: "I don't think the August employment report has changed my view. I feel comfortable about the start of this year and the gradual reduction in the first half of next year."
New York Fed Chairman Williams and Fed Governor Bowman also said that it may be appropriate to reduce debt purchases this year.
"The appropriate basic scenario is still the Fed's decision to reduce the weight in November," Evercore ISI central bank strategy director Krishna Guha wrote in a client report. He expects that the Fed meeting wording will "prefer to reduce the weight in November, but will not lock in November", because if the employment data in September is weak, it may be postponed to December.
[The U.S. dollar follows the rise in U.S. bond yields, and the market focuses on when the Fed will start to reduce bond purchases]
The US dollar followed US Treasury yields higher on Friday, and investors are concerned about when the Fed may begin to reduce asset purchases.
The U.S. dollar has rebounded from a one-month low hit last Friday. The August employment data released that day showed that employment growth has slowed and wages have risen higher than expected.
However, the U.S. dollar has not yet established a strong trend, and investors are waiting for new clues to determine when the Fed may begin to reduce its bond purchase plan and eventually raise interest rates.
"The most important thing for me is when the Fed will raise interest rates. Unfortunately, we won't know the answer for a while," said Erik Nelson, a macro strategist at Wells Fargo Bank in New York.
The Wall Street Journal said on Friday that Fed officials will seek to reach an agreement at the September meeting to reduce bond purchases starting in November.
Fundamentals are bullish
[Economists lowered US GDP forecasts for the rest of this year]
Faced with the rapid spread of delta variants, rising inflation rates and continuing supply challenges, economists have lowered their expectations for US economic growth for the rest of the year.
According to the median forecast of the latest monthly survey, economists lowered the third-quarter economic growth forecast from 6.8% to 5%, and lowered the fourth-quarter growth forecast from 5.6% to 5.3%.
James Knightley, chief international economist at ING, said: "Consumer confidence has been hit hard and has been reflected in the cooling of air passenger transport, restaurant reservations and leisure activities. Given that retail sales also appear to be stagnant, we now expect consumers in the third quarter. Expenditure will shrink."
Economists predict that consumer spending will grow at an annualized rate of 2.1% in the third quarter, well below the 4.5% forecast in the August survey. Although the increase in new cases and hospitalizations across the country has cooled economic activity, forecasters believe that the epidemic is weakening.
[US stocks closed sharply, Apple fell sharply due to app store rulings]
The U.S. stock market closed sharply on Friday. Investors were weighing signs of rising inflation. Apple’s stock price plummeted and was affected by unfavorable judgments on its App Store.
(Dow daily chart)
Data show that the US Producer Price Index (PPI) rose strongly in August, recording the largest annual increase in nearly 11 years, and hinted that high inflation may continue as the epidemic put pressure on the supply chain.
Cleveland Federal Reserve Chairman Meester said that despite the weak employment report in August, she still hopes that the Fed will begin to reduce the scale of asset purchases this year, which has also hit market sentiment.
The S&P 500 index rose by about 19% in 2021, supported by the central bank's dovish policies and the optimism of the economic restart.
However, US stocks have been trading sideways in recent trading days. Investors have digested the signs of rising inflation and are concerned about the impact of the Delta variant on economic recovery. Investors are also not sure when the Fed will begin to shrink the large-scale support measures it implemented to protect the economy from the epidemic.
Greg Bassuk, CEO of AXS Investments, said: “The market is taking a breather. Investors are looking for some major news or information that is beyond the expected range, and some major unexpected news or information, whether positive or negative, in order to better Understand how the situation will develop for the rest of this year."
This week's trend forecast
According to the latest results of the Kitco News gold survey, as the sentiment of Wall Street analysts has clearly turned neutral and retail investor interest is sluggish, gold prices are not expected to rise anytime soon.
Since mid-July, the price of gold has tested the resistance level of $1830, but has failed to gain a foothold. The latest push up failure and the drop below $1,800 before the weekend disappointed bullish investors and analysts.
Colin Cieszynski, chief market strategist at SIA, said: "At present, gold seems to be stuck in the trading range of $1760 to $1840. There is not much direction. There is not much news in the coming week that may change this situation."
Last week, 15 Wall Street analysts participated in the Kitco News gold survey. Among the participants, 9 or 60% expected the price of gold to trade sideways. At the same time, the bullish and bearish prospects each received three votes or 20%.
Although retail investors are still bullish on gold, there is a clear lack of interest in the market. Participation in the survey this week dropped to its lowest point since May 2019.
A total of 494 votes were obtained in online voting. Among them, 274 respondents (55%) believe that gold will rise this week. Another 127 or 26% said it was lower, while 93 or 35% of voters were neutral.
Ole Hansen, Head of Commodity Strategy at Saxo Bank, said that gold will continue to struggle as the U.S. dollar remains relatively strong. He added that the U.S. dollar is still the biggest resistance to gold, and real bond yields are still in a severely negative area.
Although Hansen believes that the price of gold will not rise soon, he added that in the current environment, he believes that the price of gold will not be much lower than $1,800 per ounce.
He said: "The physical demand in the spot gold market is strong, but if the price is going to rise, then we need to see paper investors and speculators return to the market until they see the price rise above US$1830 an ounce and have some momentum. Behind this move."
Equiti Capital market analyst David Madden said he also expects gold to remain range-bound. He added that with the stock market at record valuations, market uncertainty continues to increase, which will maintain safe-haven buying of gold.
Mark Chandler, managing director of Bannockburn Global Forex, said he is also bearish on gold because he believes the dollar will have more momentum in the near future. He added that rising inflation is pushing up interest rates, which supports the dollar.
In general, if the price of gold cannot close above 1800 this week, downside risks will gradually increase.
(Spot gold daily chart)
GMT+8 8:39, spot gold was quoted at US$1,786.89 per ounce.
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