Market News International gold price rebound space is limited, pay attention to two key events in December
International gold price rebound space is limited, pay attention to two key events in December
On November 24, international gold prices rose, but the dollar’s strength and the market’s expectation that the Fed might raise interest rates sooner limited the room for gold prices to rebound. The Fed's December meeting will at least discuss whether to accelerate the pace of reducing debt purchases. The record highs of cost pressures on British companies have also raised the possibility that the Bank of England will raise interest rates in December. The price of gold is expected to remain below the key price of $1,800.
2021-11-24
8633
On Wednesday (November 24), international gold prices rose, but the strong US dollar and the market's expectation that the Fed might raise interest rates earlier, limited the room for gold prices to rebound. The record highs of cost pressures on British companies have also raised the possibility that the Bank of England will raise interest rates in December. The price of gold is expected to remain below the key price of $1,800.
GMT+8 14:31, spot gold rose 0.21% to 1,792.91 US dollars per ounce; COMEX gold main contract rose 0.51% to 1,795.4 US dollars per ounce; the dollar index rose 0.04% to 96.521.
The U.S. dollar index on Tuesday (November 23) hit a new high of 96.612 since mid-July 2020, putting pressure on gold prices because it increases the cost of buying gold for buyers who hold other currencies. The market predicts that in the case of soaring consumer prices, Fed Chairman Powell, who has just been nominated for re-election, may accelerate the normalization of the Fed's monetary policy.
For several months, Powell has insisted that current inflationary pressures may be temporary, and said that the central bank is patient with the decision when to start raising interest rates. There are signs that unprecedented supply disruptions are being eased, freight costs have fallen by a third in the past month, and prices of commodities such as iron ore and timber have plummeted.
In November, the Fed began to gradually reduce its monthly bond purchase plan of $120 billion, and plans to complete this process by mid-2022. But the market generally believes that the Fed will need to reduce debt purchases and raise interest rates faster than expected to curb rising consumer prices. The CPI in October increased at the fastest rate in more than 30 years.
And some Fed officials recently held public debates on whether it is necessary to withdraw support for the economy more quickly to help curb inflation, which reinforces the above view. Vice Chairman Clarida said earlier this month that the Fed's December meeting will discuss whether to speed up the pace of reducing debt purchases. The Fed Governor Waller directly called on the Fed to double down on the scale of asset purchases.
Gary Cloud, portfolio manager of Hennesnsy Equity and Income Fund, said: "We are in an era that has never been witnessed in history, because there is a lot of uncertainty about whether the Fed will act in a timely manner to prevent an inflation spiral."
Jeffrey Halley, senior market analyst at OANDA, said: "Although most of the fast-money long positions last week may have been closed now, gold is unlikely to have a meaningful rebound above $1,800." Halley expects gold's short-term Any rebound will be limited to less than $1,810, and claims surrounding higher inflation and rising interest rates temporarily support bond yields.
Investors also assess the UK data released on Tuesday. Data show that UK companies’ new orders grew strongly in November, while cost pressures hit a new high, which raised the possibility of the Bank of England’s interest rate hike in December. The Bank of England previously predicted that the inflation rate next year will reach around 5%.
The increase in interest rates will not mitigate the direct impact of soaring energy prices and bottlenecks in the global supply chain. But the Bank of England hopes that they can reduce the possibility of spiraling wages and prices, lest high inflation rates last longer.
GMT+8 14:31, spot gold rose 0.21% to 1,792.91 US dollars per ounce; COMEX gold main contract rose 0.51% to 1,795.4 US dollars per ounce; the dollar index rose 0.04% to 96.521.
The U.S. dollar index on Tuesday (November 23) hit a new high of 96.612 since mid-July 2020, putting pressure on gold prices because it increases the cost of buying gold for buyers who hold other currencies. The market predicts that in the case of soaring consumer prices, Fed Chairman Powell, who has just been nominated for re-election, may accelerate the normalization of the Fed's monetary policy.
For several months, Powell has insisted that current inflationary pressures may be temporary, and said that the central bank is patient with the decision when to start raising interest rates. There are signs that unprecedented supply disruptions are being eased, freight costs have fallen by a third in the past month, and prices of commodities such as iron ore and timber have plummeted.
In November, the Fed began to gradually reduce its monthly bond purchase plan of $120 billion, and plans to complete this process by mid-2022. But the market generally believes that the Fed will need to reduce debt purchases and raise interest rates faster than expected to curb rising consumer prices. The CPI in October increased at the fastest rate in more than 30 years.
And some Fed officials recently held public debates on whether it is necessary to withdraw support for the economy more quickly to help curb inflation, which reinforces the above view. Vice Chairman Clarida said earlier this month that the Fed's December meeting will discuss whether to speed up the pace of reducing debt purchases. The Fed Governor Waller directly called on the Fed to double down on the scale of asset purchases.
Gary Cloud, portfolio manager of Hennesnsy Equity and Income Fund, said: "We are in an era that has never been witnessed in history, because there is a lot of uncertainty about whether the Fed will act in a timely manner to prevent an inflation spiral."
Jeffrey Halley, senior market analyst at OANDA, said: "Although most of the fast-money long positions last week may have been closed now, gold is unlikely to have a meaningful rebound above $1,800." Halley expects gold's short-term Any rebound will be limited to less than $1,810, and claims surrounding higher inflation and rising interest rates temporarily support bond yields.
Investors also assess the UK data released on Tuesday. Data show that UK companies’ new orders grew strongly in November, while cost pressures hit a new high, which raised the possibility of the Bank of England’s interest rate hike in December. The Bank of England previously predicted that the inflation rate next year will reach around 5%.
The increase in interest rates will not mitigate the direct impact of soaring energy prices and bottlenecks in the global supply chain. But the Bank of England hopes that they can reduce the possibility of spiraling wages and prices, lest high inflation rates last longer.
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