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Market News 【Market Morning】Gold falls, but ends above $1,800 mark, Dollar steady

【Market Morning】Gold falls, but ends above $1,800 mark, Dollar steady

Gold eases on firmer dollar as U.S. inflation data looms;Oil prices slip as economic worries offset tightening supplies; Dollar steady amid pandemic concerns, before key inflation data; Dow jumps 120 points to close just shy of 35,000 on earnings optimism.

TOPONE Markets Analyst
2021-07-13
8154

On Monday (July 12), the US dollar rose slightly. At the beginning of this week, the market's cautious mood prevailed, suppressing risk sentiment and boosting the US dollar. Gold futures prices closed down, but remained above the $1,800 mark for the fourth consecutive trading day. The U.S. dollar climbed and U.S. stocks reached a record high, putting pressure on gold prices. U.S. oil fell 0.60% in late trading to $74.18 per barrel. Concerns that the spread of the delta variant of the new crown virus will damage tourism and thereby suppress fuel demand, put pressure on oil prices.

Commodity closing, COMEX August gold futures closed down 0.3%, at 1,805.90 US dollars per ounce. WTI August crude oil futures closed down 0.46 US dollars, or 0.61%, to 74.10 US dollars per barrel; Brent September crude oil futures closed down 0.39 US dollars, or 0.51%, to 75.16 US dollars per barrel.

US stocks closed: the S&P 500 index rose 0.4% to 4,384.63 points; the Dow Jones Industrial Average rose 0.4% to 34,996.18 points; the Nasdaq Composite index rose 0.2% to 14,733.24 points; the Nasdaq 100 index rose 0.4 %, reported 14877.89 points; Russell 2000 index rose 0.1%, reported 2281.825 points.

Preview Tuesday


timeareaindexThe former valuePredictive value
10:30ChinaJune Trade Account-RMB denominated (100 million yuan)29602700
10:30ChinaAnnual export rate in June-RMB denominated (%)18.115.1
10:30ChinaAnnual import rate in June-RMB denominated (%)39.520.8
10:30ChinaTrade account in June-U.S. dollar denominated (100 million U.S. dollars)455.3447
10:30ChinaAnnual import rate in June-U.S. dollar denominated (%)51.129.5
10:30ChinaAnnual export rate in June-USD denominated (%)27.9twenty three
14:00GermanyJune CPI annual rate final value (%)2.32.3
20:30United StatesJune CPI annual rate has not been adjusted seasonally (%)54.9
20:30United StatesThe core CPI annual rate in June has not been adjusted seasonally (%)3.84
20:30United StatesThe CPI index was not adjusted seasonally in June269.2270.72
04:30 AMUnited StatesChanges in API crude oil inventories in the week as of July 9 (10,000 barrels)-798.3
04:30 AMUnited StatesChanges in API gasoline inventories in the week ending July 9 (10,000 barrels)-273.6
04:30 AMUnited StatesChanges in API refined oil inventories in the week ending July 9 (10,000 barrels)108.6


14:00 The Bank of England releases the July 2021 Financial Stability Report

List of major global markets



The US benchmark stock index hit a record high on Monday, and investors are waiting for the second quarter performance period that kicks off this week to judge whether corporate earnings can support current market valuations. U.S. Treasury yields rose slightly. Financial and communications services stocks led the S&P 500 index to new highs, while Tesla, Nvidia, and Google’s parent company Alphabet pushed the Nasdaq 100 index to an all-time high; both of these indexes set record high closings last Friday .

The S&P 500 index rose for the second consecutive day on Monday, with 9 of its 11 industry stocks rising; Tesla rose 4.4%, which contributed the most to the index’s rise. The US will announce the June Consumer Price Index on Tuesday, which will provide more information on inflationary pressures.

LPL Financial strategists Jeff Buchbinder and Ryan Detrick said that as the economy restarts on a wider scale, we expect more good news this quarter, but at the same time admit that the second quarter will almost certainly become the peak of earnings growth in the current cycle.

Precious metals and crude oil


Spot gold fell slightly on Monday, closing at around $1806, as the strengthening of the U.S. dollar and the stock market weakened the demand for gold as an alternative asset; investors cautiously looked forward to the US inflation data, which may affect the timetable for the Fed to reduce its bond purchase plan.

TD Securities analysts headed by Bart Melek said in a report that despite the continuous weekly rise, gold still failed to break through the recent range under the background of low interest rates and real yields, highlighting the hawkish rhetoric of the Fed. After that, speculators had no incentive to buy gold.

However, strategist Robin Tsui pointed out that central bank demand and ETF potential capital inflows are expected to support gold prices in the second half of the year; he said that in the next two months, the price should consolidate above US$1,800 and may rise to US$1,900.

Oil prices fell, and U.S. oil fell 0.60% in late trading to $74.18 per barrel; fears that the spread of the variant virus would disrupt the global economic recovery, but the tight supply of crude oil limited the decline. The global economic recovery has pushed fuel demand to near pre-pandemic levels.

Some areas of Japan, South Korea and Vietnam have implemented new travel restrictions for epidemic prevention to curb the spread of variants of the delta virus, casting a shadow over the prospects for oil demand. As of Sunday, the number of confirmed cases in the United States has soared 47% in the past week, the largest weekly increase since April 2020.

Rystad Energy analyst Louise Dickson said that traders are now refocusing on the raging epidemic and global concerns about the spread of new variants of the virus.

Forex


The U.S. dollar climbed across the board on Monday. Concerns about the epidemic prompted investors to seek safe haven. At the same time, they are also waiting for more clues about the recovery of the global economy. The Canadian dollar and Norwegian krone have fallen with oil prices.

The dollar index rose by 0.13% to 92.264. The yield on U.S. Treasury bonds was nearly flat, and the yield on benchmark 10-year Treasury bonds was close to 1.36%; the trend of the US dollar may be affected by Fed Chairman Powell’s testimony in Congress this week and inflation and manufacturing data.

Western Union Business Solutions senior market analyst Joe Manimbo said that early this week market cautious sentiment dominated the market, suppressing risk sentiment and boosting the dollar.

As the market is highly sensitive to any remarks about reducing debt purchases early, the US inflation data released on Tuesday will be closely watched, after which Fed Chairman Powell will testify in Congress on Wednesday and Thursday.

Ronald Simpson, managing director of global currency analysis at Action Economics, said in a report that if inflation is higher than expected, it will boost U.S. bond yields and the U.S. dollar, and bring the Fed's discussion of reducing bond purchases back into focus.

The euro fell 0.13% to 1.1861 against the US dollar; it fell 0.3% to 1.1836 at one time; European Central Bank President Lagarde expected the ECB's policy guidance in July to change.

The U.S. dollar against the yen rose 0.21% to 110.37; it fluctuated between the ups and downs of 0.2% during the session; traders said that as the risk tone improved, the dollar against the yen was supported by commercial and model buying; it may be limited in the near term Selling near 111 yen.

The pound fell 0.13% to 1.3883 against the dollar; British Prime Minister Johnson is expected to confirm that he plans to remove almost all remaining epidemic restrictions in the UK from July 19, despite the surge in new crown cases to the highest level in several months.

The U.S. dollar rose 0.07% to 1.2453 against the Canadian dollar; fluctuating around large options with a strike price of 1.25 and expiring on Friday; investors are paying attention to the interest rate statement issued by the Bank of Canada on Wednesday to see if the bank will announce a slowdown in asset purchases. Traders expect the Bank of Canada to take a tough stance on Wednesday’s policy decision.

TD's McCormick said that given that the optimism surrounding the central bank has been basically digested by the market, the US dollar against the Canadian dollar may move towards 1.26; he reiterated his recommendation to hold short positions in the Canadian dollar against the yen to hedge against risk aversion.

The Australian dollar, which is usually regarded as a representative of risk liquidity, fell 0.16% to 0.7476 against the US dollar; the New Zealand dollar fell 0.27% to 0.6981 against the US dollar.

International news


[New York Fed President Williams: The requirement for further substantive progress has not been achieved on the issue of the Fed's QE reduction and interest rate hikes. Through the purchase of US Treasury bonds and pledged loan-backed securities (MBS), easing is provided. I prefer FOMC to reduce QE first and then raise interest rates. It is too early to judge the trend of inflation. The reverse repurchase operation helps the Fed respond to unexpected shocks. The panic over Delta, a mutant strain of new crown pneumonia, may be one reason for the decline in yields]

[Minneapolis Federal Reserve Chairman Kashkari: There are still 7-10 million unemployed in the United States. The US labor market should become stronger by the fall. I also think that the rise in US inflation is temporary. For inflation, the labor market is the most important factor]

[Fed’s one-year consumer inflation expectations hit a record high in June, highlighting the growing public concern about rising inflation] The latest survey results released by the Federal Reserve on July 12 show that in June the American public’s concern about inflation reached a level of self-esteem. The highest record since June 2013. According to the latest survey results, the public’s median expectation of inflation in the United States is a 4.8% increase in one year, setting a new high for this indicator, with a three-year increase of 3.6%. In addition, people expect that housing prices will continue to rise, rising by 6.2% in a year, which is much higher than the previous average of 3.7%, food and gasoline prices will fall slightly, and university tuition fees are expected to increase by 7%.

[OPEC+ Oil Supply Tight in August, Deadlock Unsolved] The delegates said that a week after OPEC+ abandoned the meeting during the quarrel, the window for the increase in oil production in August will close soon, and no agreement has yet been reached. Although other member states hope to reach a compromise, there are few signs that Saudi Arabia and the UAE have made progress in resolving disputes over how to measure their output.

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