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Market News Retail sales headed up to boost market confidence, and gold suffered another setback and bulls ran away

Retail sales headed up to boost market confidence, and gold suffered another setback and bulls ran away

The unexpected increase in US retail sales in August announced on September 16 may be boosted by back-to-school shopping and government tax credits for children, which may ease expectations of a sharp slowdown in economic growth in the third quarter. But after the retail sales report was released on Thursday, Morgan Stanley economists raised their third-quarter GDP growth forecast from 3.3% to 5.0%. Goldman Sachs raised its interest rate forecast from 3.5% to 4.5% and lowered it to 5.25% earlier this month. As the dollar and U.S. Treasury yields rose, and stronger data were released, gold bulls rushed out of the market.

Eden
2021-09-17
10058

On Thursday (September 16), the unexpected increase in US retail sales in August may be boosted by back-to-school shopping and government tax credits for children, which may ease expectations of a sharp slowdown in economic growth in the third quarter. But after the retail sales report was released on Thursday, Morgan Stanley economists raised their third-quarter GDP growth forecast from 3.3% to 5.0%. Goldman Sachs raised its interest rate forecast from 3.5% to 4.5% and lowered it to 5.25% earlier this month. As the dollar and U.S. Treasury yields rose, and stronger data were released, gold bulls rushed out of the market.



U.S. retail sales unexpectedly rise, strong boost to economy


In the context of declining consumer confidence, the retail sales announced by the US Department of Commerce on Thursday unexpectedly rebounded. Car sales were driven by the surge in online car purchases, which offset the continued decline in car dealerships. But sales in July were far below initial estimates.

Economists have been downgrading their estimates of gross domestic product (GDP) for the current quarter on the grounds that car sales have fallen sharply as a result of severe inventory shortages and the surge in new crown cases triggered by the delta variant. Chris Low, chief analyst at FHN Financial, said, "Despite the gradual weakening of stimulus measures, the slowdown in U.S. consumption is not as fast as a month ago, and the delta mutant strain has little impact on industries that drive retail sales. The economy continued in August. active."

Excluding retail sales of automobiles, gasoline, construction materials and food services, after being revised downward in July to a decline of 1.9%, it rebounded by 2.5% last month. Core retail sales are the closest to the consumer spending component of GDP. The index was previously expected to be 0% in August.


(U.S. core retail sales monthly rate)

Retail sales increased by 0.7% last month, and sales increased by 15.1% year-on-year, which was 17.7% higher than the pre-epidemic level. Although consumption is shifting from commodities to services such as tourism and entertainment, they remain strong. Retail sales are mainly commodities, and services such as medical care, education, tourism and hotel accommodation constitute the remainder of consumer spending. Most school districts started the 2021-2022 school year in August this year and resumed offline teaching. Eligible families will begin to receive funding from the expanded children’s tax credit program in mid-July, which will last until December. Sales at clothing stores rose 0.1% last month. Strong growth in revenue from building materials and furniture stores.

But car dealership sales fell 3.6% after falling 4.6% in July. The continuing global shortage of microchips has forced automakers to cut production. The semiconductor crisis worsened by the spread of the epidemic has also led to a shortage of some electronic products. Sales of electronics and home appliances stores fell by 3.1%. Income from sporting goods, hobbies, musical instruments and bookstores also declined. With the surge in the number of people infected with the coronavirus, the traffic of restaurants and bars has decreased and sales have remained flat. Restaurants and bars are the only service category in the retail sales report.

Retail sales go up against the wind, boosting confidence in economic recovery


The American Retail Federation said that despite the difficulties, sales are still growing, which reflects the continued strength of U.S. consumption and the resilience of U.S. retailers. NRF President Matthew Shay said: "We remain confident in the strong momentum of consumption and fully believe that this year's retail sales will hit a record high, and retailers will usher in a strong holiday shopping season."

Americans accumulated at least $2.5 trillion in excess savings during the epidemic. As companies race to fill a record 10.9 million job openings, wages are rising. Another report released by the US Department of Labor on Thursday showed that as of the week of September 11, the number of initial jobless claims after seasonal adjustments increased by 20,000 to 332,000.

Hurricane Ida destroyed U.S. offshore energy production and destroyed the power supply in Louisiana. Ada also flooded Mississippi and caused historic floods in New York and New Jersey. After the first week of assistance, the number of people who continued to receive relief fell by 187,000 in the week ending September 4 to 2.665 million, the lowest level since mid-March 2020. The federal government-funded benefits will expire early this month, which is expected to increase labor reserves. Conrad DeQuadros, a senior economic adviser at Brean Capital in New York, said: "There is no evidence that the surge in new crown cases has forced economic austerity."

The third report released by the Philadelphia Federal Reserve showed that the US corporate activity index jumped to 30.7 in September from 19.4 in August. The index above zero indicates growth in manufacturing in the region, which includes eastern Pennsylvania, southern New Jersey, and Delaware. Manufacturers report that input prices have eased, which is in line with recent data, which suggests that inflation may have peaked. They also increase the working hours of workers because it is difficult for them to find labor. Despite the expected slowdown, manufacturers are still optimistic about business conditions in the next six months.

Institutions raise GDP expectations, the Fed’s reduction of expectations heats up gold frustrated


Declining car sales and difficulties for companies to replenish inventories prompted economists to lower their estimates for GDP growth in the third quarter. The fourth report released by the US Department of Commerce on Thursday showed that inventory accumulation slowed down in July. On Wednesday, JPMorgan economists lowered their forecast for the third quarter's annualized GDP growth rate from 7.0% to 5.0%. The Beige Book report released by the Federal Reserve last week showed that from early July to August, economic growth slowed slightly to a moderate pace.

But after the retail sales report was released on Thursday, Morgan Stanley economists raised their third-quarter GDP growth forecast from 3.3% to 5.0%. Goldman Sachs raised its interest rate forecast from 3.5% to 4.5% and lowered it to 5.25% earlier this month.

Bob Haberkorn, senior market strategist at RJO Futures, said that gold has suffered a considerable blow. With the rise in U.S. dollar and U.S. Treasury yields and stronger data releases, gold bulls are vying to exit the market; Haberkorn added that unless there are some geopolitical events Or the Fed may be surprised, otherwise the trajectory of gold is unlikely to change before the Federal Open Market Committee (FOMC) meeting.

The number of initial claims for unemployment benefits in the United States last week was slightly higher than expected, but this data showing the sluggish labor market did not give gold much breathing room. The focus now shifts to the Fed meeting on September 21-22. Quantitative Commodity Research analyst Peter Fertig said that many members of the FOMC are in favor of reducing asset purchase plans this year, so the gold outlook is not optimistic.

On Thursday (September 16), the price of gold fell by nearly 3%, and silver fell by more than 5% at one time. On Friday, the price of gold in the Asian market remained stable near the one-month low and the previous day. The strong U.S. retail sales data boosted the U.S. dollar and added justification for betting that the Federal Reserve may accelerate the reduction in debt purchases.


(Spot gold daily chart)

At 09:22 on September 17, GMT+8, spot gold was quoted at $1,757.38 per ounce.

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