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Market News International gold prices are strong, the U.S. index hits a three-and-a-half-week low, Powell needs its endorsement

International gold prices are strong, the U.S. index hits a three-and-a-half-week low, Powell needs its endorsement

On August 31, the international gold price rose because the US dollar index fell to a new low of 92.456 since August 6. Investors are currently paying attention to US non-agricultural employment data, which may be the key to the Fed's decision to cut stimulus. Powell previously stated that if job growth continues, the Fed may begin to cut asset purchases this year.

2021-08-31
10741
On Tuesday (August 31), international gold prices rose, as the US dollar index fell to a new low of 92.456 since August 6. Investors are currently paying attention to US non-agricultural employment data, which may be the key to the Fed's decision to cut stimulus.

At GMT+8 16:05, spot gold rose 0.29% to US$1815.50 per ounce; the main COMEX gold contract rose 0.31% to US$1817.9 per ounce; the US dollar index fell 0.22% to 92.493.


The U.S. dollar continued its downward trend since Fed Chairman Powell made dovish remarks at the annual meeting of global central banks last week. At the time, he did not send a clear signal to reduce the timetable. Gold is seen as a hedge against inflation and currency devaluation.

OCBC Bank analyst Howie Lee said: "Gold prices will rise slightly in the next few days... But once this report is finally released, it may change the rules of the game, depending on the strength of non-agricultural data. But once the stimulus is reduced. The process has officially begun, and selling pressure will begin to accumulate."

The United States is scheduled to release the August non-agricultural employment report on Friday (September 3). The market is expected to add 750,000 jobs, the unemployment rate will fall from 5.4% to 5.2%, and the average hourly wage rate is expected to remain unchanged at 4%. Powell only said last week that if job growth continues, the Fed may begin to cut asset purchases this year.

Hareesh V, head of commodities research at Geojit Financial Services, said: "If the employment data is disappointing, gold may break through recent highs, and then it may even reach $1,900."

Loretta Mester, chairman of the Cleveland Federal Reserve Bank of the United States, said on Monday (August 30) that the US economy is recovering strongly, but she still does not believe that the recent inflation readings are sufficient to achieve the price stability target adjusted by the Fed a year ago.

She said that there are upside risks to inflation, and officials need to pay close attention to price changes. "Before I come to the conclusion that inflation is at 2% and will remain above 2% for a period of time, I hope to see more data... …" But she expects that after some supply chain disruptions caused by the epidemic are resolved, some inflation indicators will fall.

Meester’s speech highlighted the growing tensions between the Fed’s policymakers, which are now approaching a policy turning point, but they have not reached a broad consensus on some of the key thresholds that define its goals. It turns out that defining these thresholds is tricky, and there is little evidence that there is broad consensus among policymakers.

Meester said that it will also be important to pay attention to inflation expectations to ensure that inflation expectations are anchored at 2%, and may remain at this level, even before the pandemic, this goal is difficult to achieve. She said: "In a way, I don't belong to the camp that thinks it has reached this standard."
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