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Market News Gold trading reminder: Wall Street is generally optimistic about the price of gold this week, and the rise may still be the main theme!

Gold trading reminder: Wall Street is generally optimistic about the price of gold this week, and the rise may still be the main theme!

During the Asian session on November 15, spot gold held steady at around 1865. Gold prices are currently rising for seven consecutive days, supported by a sharp decline in US consumer confidence and a weaker U.S. dollar, but the strength of the stock market has put pressure on the gold market. Wall Street analysts and retail investors continue to be bullish on the price of gold this week, and there may be opportunities to continue to do more after the correction this week.

LEO
2021-11-15
11735

On Monday (November 15) Asian session, spot gold price held steady at around 1865. Last Friday (November 12), the price of gold bottomed out and achieved seven consecutive gains. It was supported by a sharp decline in US consumer confidence and a weaker U.S. dollar. However, the strength of the stock market put pressure on the gold market.

In the day, we will focus on a series of economic data from China.


Fundamentals are bullish


[U.S. consumer confidence index fell to a 10-year low in early November]

In the United States, consumer confidence unexpectedly fell sharply in early November, and Americans are increasingly worried about rising prices and their impact on financial conditions.

Data released on Friday showed that the initial value of the University of Michigan Consumer Confidence Index fell to 66.8 from 71.7 in October. Lower than the expectations of all economists surveyed, the median forecast of economists was 72.5.

Richard Curtin, who is in charge of the investigation, said in a statement that the decline in consumer confidence stems from "rising inflation, and people increasingly believe that there is no effective policy to reduce the damage caused by the surge in inflation."

Consumers expect inflation to rise to 4.9% in the next year, the highest level since 2008. People expect the inflation rate for the next 5-10 years to be 2.9%, which is the same as last month.

The University of Michigan report showed that household consumer goods purchasing conditions deteriorated sharply, and related indicators fell to 78, the second lowest since 1978. In the survey, rising costs of automobiles, durable goods and housing were mentioned more frequently.

Bloomberg economist Eliza Winger said in the report that “the risk in the future is that sustained substantial price increases are affecting people’s inflation expectations. In the short term, supply shortages and price factors should continue to curb inflation-adjusted expenditure levels.”

Americans are also more pessimistic about the economic prospects in the next five years, with relevant indicators dropping to their lowest levels since 2011.

[The number of resignations in the United States in September hit a record high]

The U.S. Department of Labor’s Job Vacancies and Labor Flow Survey (JOLTS), released on Friday, reflected economic imbalances, with strong demand meeting labor and commodity shortages, driving overall inflation to its largest annual increase in 31 years.

Although the number of new cases of new crowns in a single day has declined, wage inflation shows little signs of abating. Employers in almost every industry are competing to attract workers. Compared with the pre-pandemic level, the number of people in the labor force is 3 million. .

The resignation in September increased by about 164,000 to 4.4 million, a record high. The turnover rate is seen as a good indicator of confidence in the labor market, and workers choose to resign when they are more confident in their ability to find a new job.

After the release of the report, Michael Pearce, senior US economist at Capital Economics, said: "The continued surge in the number of resignations shows that wage growth is between 4.5% and 5.0%, which is much higher than the level where inflation can continue to fall to the Federal Reserve's 2% target. "

On the last day of September, job vacancies that measure labor demand dropped slightly by 191,000 to 10.4 million . The number of recruits in September also remained basically unchanged at 6.5 million.

The labor shortage may continue for a longer period of time, although the wave of infections caused by the Delta variant virus has fallen from the high level reached in mid-September. Government assistance to promote savings at record highs, as well as strong stock markets and record house price increases, seems to continue to provide a short-term buffer, allowing people to weigh when they will return to the job market. Higher-than-normal early retirement also played a role.

[Kashkali: The Federal Reserve's monetary policy should not overreact to inflation]

Minneapolis Federal Reserve Chairman Kashkari said that although inflation will cause pain to Americans, the Fed should not overreact to this issue because price increases may be temporary.

Kashkari said on CBS’s “Face the Nation” program on Sunday, “We need to take inflation very seriously, but my view is that even if the pain caused by inflation is real, we don’t need to deal with some temporary problems. Factors are overreacting".

Kashkari said that monetary policy is "appropriate" and that the removal of stimulus measures too soon may ultimately cause more harm to the economy than it helps to reduce inflation.

Kashkari expects that the increase in demand related to the previous fiscal stimulus and the tight supply caused by the epidemic will gradually ease.

[The U.S. dollar has fallen from a high level]

The U.S. dollar fell slightly on Friday, and high inflation has dealt a severe blow to consumer confidence.

(Daily chart of the US dollar index)

Erik Nelson, a macro strategist at Wells Fargo Bank, said, “Consumers are obviously more worried about real income growth. The current rate of inflation exceeds the rate of wage growth, which is suppressing market sentiment.”

"This intensified concerns about growth and pushed the U.S. dollar lower against most currencies, especially as U.S. Treasury yields fell and the U.S. dollar fell against the Japanese yen."

Shaun Osborne, chief foreign exchange strategist at Scotiabank, said: "This morning's confidence data may surprise the market...maybe it may push the dollar back slightly from its high."

Although the bond market closed on Thursday interrupted the market's flow this week, Osborn said that the market is still "clearly concerned about inflation", which he said "should mean that the dollar remains relatively well supported."

"There will be a deadlock in the next few months, and we will pay close attention to the actions of the Fed," he added.

Fundamentals are bad


[The three major U.S. stock indexes all rose on Friday]

The U.S. stock market closed higher on Friday. Market-leading growth stocks pushed the US stock index higher, and investors got rid of the disappointing U.S. economic data.

David Carter, chief investment officer of Lenox Wealth Advisors, said: “The consumer confidence report is very weak, but the market continues to rise today. Inflation seems to hit consumers more than it hits corporate profits.”

As the holiday shopping season approaches, the deteriorating consumer sentiment may make retailers worry and may make people pay more attention to the upcoming retailer's performance.

Carter added: “Investors will pay attention to retailers’ financial forecasts to determine whether inflation will depress profit margins or whether costs can be passed on.”

The third quarter earnings season is coming to an end, and corporate performance is generally optimistic. As of Friday, 459 companies in the S&P 500 index have announced their earnings. Refinitiv data shows that 80% of the profits exceeded expectations.

The Dow Jones Industrial Average rose 0.5%, the S&P 500 Index rose 0.72%, and the Nasdaq Index rose 1%.

(S&P 500 daily chart)

Gold price trend this week


The sentiment in the global gold market has been clearly bullish, as precious metals have seen their best weekly gains in six months.

This week the price of gold broke the current downward trend. After the US Consumer Price Index showed an annual growth rate of 6.2%, the highest level in more than 30 years, inflation concerns flooded the market again, and the price of gold was pushed up to a five-month high.

Philip Streible, chief market strategist at Blue Line Futures, said: "A lot of investors have been waiting for this. This is exactly what gold should do to protect investors from rising inflation."

This week, 18 Wall Street analysts participated in the Kitco News gold survey. Among the participants, 15 analysts (83%) are bullish on the price of gold this week. At the same time, two analysts or 11% of analysts are short on gold recently, and one analyst or 6% of analysts are neutral on prices.

At the same time, online polls received a total of 1,018 votes. Among them, 722 respondents (71%) believe that the price of gold will rise this week. Another 165 or 16% said it was lower, while 131 or 13% of voters held a neutral attitude.


As inflation continues to rise, not only has gold regained interest, but some analysts have said that growing concerns about the Fed’s loss of control will continue to support prices.

Colin Cieszynski, chief market strategist at SIA Wealth Management, said that he expects the price of gold to continue to rise because it is a major move to break through $1,835. He added that the rise in silver and platinum should also consolidate the new upward trend in gold.

Jim Wyckoff, senior technical analyst at Kitco.com, said he is also bullish on gold. He said in a research report that gold is in a five-week uptrend. The next resistance target is $1,900 per ounce.

However, not all analysts are optimistic about the near-term gold. Ole Hansen said that he may see the price fall back to $1,830 per ounce before investors rise sharply again to $1,900.

In general, after the seven consecutive rises in the gold price, the pressure of the callback is increasing, and the overbought signal has appeared. There may be an opportunity to continue to do more after the callback this week.

(Spot gold daily chart)

GMT+8 8:39, spot gold was quoted at $1,864.45 per ounce.

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