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Market News Golden Week Review: The Fed announced a reduction in November? The dollar stopped falling and rebounded, and gold bulls lost for the first time in five weeks!
Golden Week Review: The Fed announced a reduction in November? The dollar stopped falling and rebounded, and gold bulls lost for the first time in five weeks!
Spot gold fell 2.2% this week to $1,787.58 per ounce. The US dollar index rebounded strongly this week, and the Fed’s internal hawkish officials were in charge. The market generally expects that the Fed will begin to reduce bond purchases in November, and the price of gold will record its first weekly negative line in five weeks.
2021-09-11
8036
Spot gold fell 2.2% this week to $1,787.58 per ounce, ending the previous four consecutive weekly gains. The US dollar index stopped falling and rebounded this week, giving the gold bulls a heavy blow. In addition, Fed officials currently generally support the reduction of debt purchases during the year. The market generally expects that the Fed will officially start in November, which has also brought huge pressure on gold prices. However, the European Central Bank’s announcement on Thursday to reduce debt purchases has brought a breathing room to gold prices. The stock market’s four-day decline this week has also brought some support to gold prices, as the general risk sentiment in the market has faded.
The U.S. dollar index has rebounded from a one-month low hit last Friday, and investors are concerned about when the Fed may begin to reduce asset purchases.
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.
Erik Nelson, a macro strategist at Wells Fargo Bank in New York, said: "The most important thing for me is when the Fed will raise interest rates. Unfortunately, we will not know the answer for a while."
Citi Research analysts reported on Thursday that September 22 is particularly important for gold. He was referring to the date of the next monetary policy announcement by the Federal Reserve.
Jackson Hole’s results are neutral, the August non-agricultural employment data is bleak, and the Delta virus is raging. After these events, we have postponed the expected time point for the Fed to announce its balance sheet reduction from September to November, but it may be It will not cut debt purchases until December .
However, according to a report in the Wall Street Journal on Friday, Fed officials will reach an agreement at the September 21-22 meeting to reduce the scale of bond purchases starting in November.
The general risk aversion in the market this week has also supported the strengthening of the US dollar, and the trend of gold has a negative correlation with the US dollar.
(Spot gold daily chart)
Although the chairman of the Federal Reserve has always played a dovish role, it is basically a certainty that the Federal Reserve will reduce debt purchases during the year.
Although Powell's speech at the Jackson Hole Global Central Bank Annual Meeting was interpreted as a dovish by the market, he still admitted that if the economy meets expectations, it is appropriate to start reducing debt purchases during the year, but he did not give a specific timetable.
At present, the Fed generally supports the voice of reducing debt purchases during the year. This has become the main theme of the moment, and it has also continued to put pressure on the gold price bulls.
Cleveland Federal Reserve Chairman Meester said on Friday that she still hopes that the Fed will begin to reduce the scale of asset purchases this year.
Meester told reporters, “I don’t think the August employment report has changed my view, that is, we have made substantial further progress. ” She said that she would be happy to see the Fed start to shrink this year and gradually end purchases in the first half of next year. debt.
Fed Governor Bowman said at an online event organized by the American Bankers Association on Thursday: "I am still optimistic about the ongoing expansion. Although some recent data may not be as strong as we expected, we still see The economic growth is very strong. We are very close to the goal of maximizing employment... If the data is as I expected, it may be appropriate to start reducing the asset purchase plan this year ."
Bowman said that disappointing data in a given month should not be taken too seriously.
Atlanta Fed President Bostic expressed the same view on Thursday. He believes that the Fed will reduce asset purchases this year, although he does not expect a decision at this month's central bank meeting.
Bostic said, "Because of the strong data in the early summer, I am really inclined to advocate the start of'cutting debt purchases' earlier than many people expected."
"The weaker data we have seen recently means that there may be opportunities for adjustments in this area, but I still think that sometime this year (slowing down asset purchases) is appropriate."
Chicago Fed Chairman Evans is still more cautious. He believes that the US economy "has not been out of the predicament." Despite strong economic growth and the hope of vaccines, challenges including supply chain and labor market bottlenecks still exist.
Evans did not express specific views on the economic situation or its policy orientation, but he previously stated that he would like to read a few more monthly employment reports before he supports slowing the pace of $120 billion in debt purchases per month.
The European Central Bank said on Thursday that it will reduce the scale of emergency debt purchases in the coming quarter and take the first small step towards the gradual end of emergency assistance. During the new crown pandemic, emergency assistance supported the euro zone economy.
Last year, due to the raging new crown epidemic, the European economy was hit hard, and the European Central Bank did its best to rescue the economy. Now that high vaccination rates across Europe have enhanced the prospects for recovery, policy makers are under pressure to acknowledge that the worst is over, and the European Central Bank has responded by slowing down the Pandemic Emergency Asset Purchase Program (PEPP) debt purchase.
The market expects that the European Central Bank will make this major decision in December . By then, the European Central Bank will conduct a comprehensive assessment of its bond purchase plan and observe the impact of the delta virus on the economy. At the same time, it will have a better direction for the Fed to withdraw from the stimulus plan. grasp.
Compared with the argument of curtailing debt purchases, European Central Bank President Lajia agrees more with the argument of "calibrating" the Emergency Anti-epidemic Bond Purchase Plan (PEPP). But the market considers the most important result, not the argument.
On the day the European Central Bank announced the reduction, the US dollar recorded the only negative line this week, and gold ushered in a respite.
(Daily chart of the US dollar index)
With the upset of non-agricultural data in August, pressure on the US labor market and supply chain has continued unabated.
The PPI data released on Friday showed that in the 12 months ending in August, the PPI jumped 8.3%, setting a new high since the data was launched in 2010.
Other data released on Friday showed that the accumulation of wholesale inventories slowed in July, highlighting strong demand and limited supply. Now, the time it takes for wholesalers to empty their shelves is the shortest in seven years.
Will Compernolle, senior analyst at FHN Financial, said: “The duration and extent of supply chain bottlenecks have exceeded most people’s expectations at the beginning of this year, and labor shortages are generally one of the main input problems faced by manufacturers, which means that consumer price inflation has been in a period of time. It will remain high in time. "
Although the American Institute of Supply Management (ISM) survey this month showed that the input price index of the manufacturing and service industries fell sharply in August, they were still at a high level. Factories and service providers still struggle to obtain labor and raw materials, and face logistics delays.
Supply bottlenecks are increasing the difficulty for companies to replenish inventories, which had previously fallen in the first half of this year.
Moody's analyst Matt Colyar said: "Manufacturers are working hard to replenish inventory to cope with the surge in demand."
Due to tight inventories, it is easy for manufacturers to pass on rising costs to consumers.
Fed Chairman Powell insists that high inflation is temporary. Although most economists agree with this view, some believe that the strong rise in wages brought about by the tightening of the labor market indicates that inflation may be more persistent.
U.S. stocks continued to fall this week, and the decline accelerated on Friday. The market is worried that the inflation data announced next week will continue to remain at a high level. Therefore, the market's risk aversion is heating up.
(Dow daily chart)
However, inflation and risk-averse sentiment failed to make gold prices rise, as the upward dollar index suppressed the gold price trend.
The dollar stopped falling and rebounded this week
The U.S. dollar index has rebounded from a one-month low hit last Friday, and investors are concerned about when the Fed may begin to reduce asset purchases.
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.
Erik Nelson, a macro strategist at Wells Fargo Bank in New York, said: "The most important thing for me is when the Fed will raise interest rates. Unfortunately, we will not know the answer for a while."
Citi Research analysts reported on Thursday that September 22 is particularly important for gold. He was referring to the date of the next monetary policy announcement by the Federal Reserve.
Jackson Hole’s results are neutral, the August non-agricultural employment data is bleak, and the Delta virus is raging. After these events, we have postponed the expected time point for the Fed to announce its balance sheet reduction from September to November, but it may be It will not cut debt purchases until December .
However, according to a report in the Wall Street Journal on Friday, Fed officials will reach an agreement at the September 21-22 meeting to reduce the scale of bond purchases starting in November.
The general risk aversion in the market this week has also supported the strengthening of the US dollar, and the trend of gold has a negative correlation with the US dollar.
(Spot gold daily chart)
Fed hawks in power
Although the chairman of the Federal Reserve has always played a dovish role, it is basically a certainty that the Federal Reserve will reduce debt purchases during the year.
Although Powell's speech at the Jackson Hole Global Central Bank Annual Meeting was interpreted as a dovish by the market, he still admitted that if the economy meets expectations, it is appropriate to start reducing debt purchases during the year, but he did not give a specific timetable.
At present, the Fed generally supports the voice of reducing debt purchases during the year. This has become the main theme of the moment, and it has also continued to put pressure on the gold price bulls.
Cleveland Federal Reserve Chairman Meester said on Friday that she still hopes that the Fed will begin to reduce the scale of asset purchases this year.
Meester told reporters, “I don’t think the August employment report has changed my view, that is, we have made substantial further progress. ” She said that she would be happy to see the Fed start to shrink this year and gradually end purchases in the first half of next year. debt.
Fed Governor Bowman said at an online event organized by the American Bankers Association on Thursday: "I am still optimistic about the ongoing expansion. Although some recent data may not be as strong as we expected, we still see The economic growth is very strong. We are very close to the goal of maximizing employment... If the data is as I expected, it may be appropriate to start reducing the asset purchase plan this year ."
Bowman said that disappointing data in a given month should not be taken too seriously.
Atlanta Fed President Bostic expressed the same view on Thursday. He believes that the Fed will reduce asset purchases this year, although he does not expect a decision at this month's central bank meeting.
Bostic said, "Because of the strong data in the early summer, I am really inclined to advocate the start of'cutting debt purchases' earlier than many people expected."
"The weaker data we have seen recently means that there may be opportunities for adjustments in this area, but I still think that sometime this year (slowing down asset purchases) is appropriate."
Chicago Fed Chairman Evans is still more cautious. He believes that the US economy "has not been out of the predicament." Despite strong economic growth and the hope of vaccines, challenges including supply chain and labor market bottlenecks still exist.
Evans did not express specific views on the economic situation or its policy orientation, but he previously stated that he would like to read a few more monthly employment reports before he supports slowing the pace of $120 billion in debt purchases per month.
The European Central Bank announces reduction in debt purchases
The European Central Bank said on Thursday that it will reduce the scale of emergency debt purchases in the coming quarter and take the first small step towards the gradual end of emergency assistance. During the new crown pandemic, emergency assistance supported the euro zone economy.
Last year, due to the raging new crown epidemic, the European economy was hit hard, and the European Central Bank did its best to rescue the economy. Now that high vaccination rates across Europe have enhanced the prospects for recovery, policy makers are under pressure to acknowledge that the worst is over, and the European Central Bank has responded by slowing down the Pandemic Emergency Asset Purchase Program (PEPP) debt purchase.
The market expects that the European Central Bank will make this major decision in December . By then, the European Central Bank will conduct a comprehensive assessment of its bond purchase plan and observe the impact of the delta virus on the economy. At the same time, it will have a better direction for the Fed to withdraw from the stimulus plan. grasp.
Compared with the argument of curtailing debt purchases, European Central Bank President Lajia agrees more with the argument of "calibrating" the Emergency Anti-epidemic Bond Purchase Plan (PEPP). But the market considers the most important result, not the argument.
On the day the European Central Bank announced the reduction, the US dollar recorded the only negative line this week, and gold ushered in a respite.
(Daily chart of the US dollar index)
U.S. PPI bursts in August, stock market declines faster
With the upset of non-agricultural data in August, pressure on the US labor market and supply chain has continued unabated.
The PPI data released on Friday showed that in the 12 months ending in August, the PPI jumped 8.3%, setting a new high since the data was launched in 2010.
Other data released on Friday showed that the accumulation of wholesale inventories slowed in July, highlighting strong demand and limited supply. Now, the time it takes for wholesalers to empty their shelves is the shortest in seven years.
Will Compernolle, senior analyst at FHN Financial, said: “The duration and extent of supply chain bottlenecks have exceeded most people’s expectations at the beginning of this year, and labor shortages are generally one of the main input problems faced by manufacturers, which means that consumer price inflation has been in a period of time. It will remain high in time. "
Although the American Institute of Supply Management (ISM) survey this month showed that the input price index of the manufacturing and service industries fell sharply in August, they were still at a high level. Factories and service providers still struggle to obtain labor and raw materials, and face logistics delays.
Supply bottlenecks are increasing the difficulty for companies to replenish inventories, which had previously fallen in the first half of this year.
Moody's analyst Matt Colyar said: "Manufacturers are working hard to replenish inventory to cope with the surge in demand."
Due to tight inventories, it is easy for manufacturers to pass on rising costs to consumers.
Fed Chairman Powell insists that high inflation is temporary. Although most economists agree with this view, some believe that the strong rise in wages brought about by the tightening of the labor market indicates that inflation may be more persistent.
U.S. stocks continued to fall this week, and the decline accelerated on Friday. The market is worried that the inflation data announced next week will continue to remain at a high level. Therefore, the market's risk aversion is heating up.
(Dow daily chart)
However, inflation and risk-averse sentiment failed to make gold prices rise, as the upward dollar index suppressed the gold price trend.
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