[Market Morning] US Economic Data is Dismal, Gold Is On a "Roller Coaster", Powell Still Believes In a Soft Landing

On Wednesday, spot gold was on a roller coaster ride, diving after hitting an intraday high of 1832.63, and giving back all gains, finally closing down 0.1% at $1,817.92 an ounce; spot silver closed down 0.44% at $20.75 an ounce.

Comment: Gold prices fell on Wednesday, and the intraday trading was volatile, being tug-of-war between two forces. On the one hand, it was the resistance brought about by aggressive interest rate hikes, and on the other hand, it was helped by safe-haven buying driven by the intensifying risk of economic recession.

Suggestion: short position of spot gold at 1818.40, target point at 1804.50

The US dollar index achieved three consecutive positives and broke through the 105 mark, closing up 0.574% at 105.12; the 10-year US bond yield continued to decline to 3.087%.

Comment: The dollar rose on Wednesday and the euro fell after Federal Reserve Chairman Jerome Powell said the biggest risk to the U.S. economy was persistently high inflation, rather than a sharp slowdown in economic growth due to higher interest rates.

Suggestion: short position of EUR/USD 1.04420, target point 1.03980

In terms of crude oil, the two crude oils dived in the U.S. session. WTI crude oil dived sharply when it hit a high of $113.99, and finally closed down 2.09% at $111.27 per barrel; Brent crude oil closed down 1.59% at $115.52 per barrel.

Comment: Oil prices slipped about 2 percent on Wednesday as rising U.S. gasoline and distillate inventories and worries about slowing global economic growth offset persistent concerns about tight crude supplies.

Suggestion: US crude oil is long at 108.290, the target point is 112.510

The three major U.S. stock indexes were weak. The S&P 500 closed down 0.07%, the Dow closed up 0.27%, and the Nasdaq closed down 0.03%. Manbang fell by more than 10%, and BOSS direct employment fell by nearly 2%.

Comment: Market leaders Apple, Microsoft and Amazon provided upside momentum, while economically sensitive chips, small-cap and transportation stocks underperformed the broader market. The Nasdaq is on track for its worst first-half performance ever, while the Dow looks set for its biggest January-June percentage drop since the financial crisis.

Suggestion: go short at 11648.700 of the Nasdaq index, target point at 11438.800

Powell: Soft landing possible despite narrowing path

Federal Reserve Chairman Jerome Powell said yesterday that the U.S. economy is strong enough to withstand monetary policy moves. With a strong labor market, there are ways, but no guarantees, to return to 2 percent inflation. A US soft landing is possible, but will be quite challenging as the path gets narrower. Powell also reiterated that the Fed will focus on inflation.

U.S. economic data is dismal, inflation remains high

Yesterday, the annualized quarterly rate of the core PCE price index in the first quarter of the United States was recorded at 5.2%, higher than the expected 5.10%; the final value of the annualized quarterly rate of real GDP in the first quarter of the United States was recorded at -1.6%, lower than the expected -1.50 %.

Fed's Mester: Advocates for a 75 basis point rate hike

Yesterday, the 2022 FOMC vote committee, Cleveland Fed President Mester said that he hopes that the US interest rate will be higher than 4% next year, and that raising interest rates is very necessary to reduce inflation. She advocated for a 75 basis point rate hike. She also said that U.S. inflation is likely to rise further and that long-term inflation expectations for businesses and households will continue to rise, but interest rates are moving toward "more normal levels" and the U.S. economy is not expected to decline.