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Market News Spot gold continues to fall, FED tragicomedy sings together, implying that it will not stop until the goal is achieved
Spot gold continues to fall, FED tragicomedy sings together, implying that it will not stop until the goal is achieved
On Wednesday (May 18), spot gold continued to fall as the U.S. dollar index stopped falling and rebounded after a three-day losing streak. Federal Reserve Chairman Powell showed a tougher stance as the Fed struggled to combat soaring inflation, emphasizing that inflation would not decline. , the Fed will not back down in the face of interest rate hikes. Other officials hailed the economic outlook, saying the U.S. economy is likely to continue growing at an above-trend rate for at least the next 18 months.
2022-05-18
11404
On Wednesday (May 18), spot gold continued to fall as the U.S. dollar index stopped falling and rebounded after a three-day losing streak. Federal Reserve Chairman Powell showed a tougher stance as the Fed struggled to combat soaring inflation. The economic outlook sings praises.
At GMT+8 20:14, spot gold fell 0.33% to US$1,808.96 per ounce; the main COMEX gold futures contract fell 0.66% to US$1,806.9 per ounce; the US dollar index rose 0.21% to 103.50.
Federal Reserve Chairman Jerome Powell pledged on Tuesday (May 17) that the central bank will raise interest rates as needed, including above neutral levels, in order to stem the spike in inflation. Soaring inflation threatens the fundamentals of the economy, he said. A neutral interest rate ensures that economic activity is neither stimulated nor restricted.
Powell acknowledged that keeping inflation under control could lead to slower economic growth and that rising unemployment would be "painful." He said there was a "path" to the pace of price increases without a full-blown recession. But Powell stressed that if inflation does not fall, the Fed will not back down from raising interest rates.
What happens next — how much and how often the central bank raises interest rates — depends on how growth and inflation momentum evolve, Powell said, with the Fed reviewing economic readings at future meetings on a case-by-case basis.
Powell's remarks cemented expectations in the interest rate futures market that the Fed is expected to continue the pace of rate hikes in May at its next two meetings in June and July, and to raise the policy rate to no less than 2.75% by the end of the year. -3.00% range. The Federal Reserve raised interest rates by 50 basis points in May, the largest single rate hike in more than 20 years.
ING economists reported that the dollar's sharp pullback eased the overbought state in previous sessions, but expectations of aggressive Fed tightening are not conducive to continued dollar weakness. Taking this into account, the dollar index should be in More and more support is found below the 103.00 area.
The U.S. economy is likely to continue growing at an above-trend rate for at least the next 18 months, and households are likely to keep spending as the effects of the pandemic recede, St. Louis Fed President Bullard said on Tuesday. This appears to downplay the risk of a recession that could come from tightening monetary policy by the Federal Reserve.
U.S. retail sales rose faster than expected in April, and March retail sales data was revised up, showing U.S. consumers were not hurt by the worst inflation in more than 40 years and showed no signs of weakness amid rising interest rates.
In his comments, Bullard said that with our long-term potential growth rate -- probably a little under 2%, 2.5% to 3% growth is fast, "that's where we're at... The U.S. labor market is very strong...household consumption is expected to be strong throughout the year."
So the Fed will not only keep raising interest rates, but probably at a very fast pace to restore the market's credibility in fighting inflation. The upward momentum of the dollar has not ended, and the overall downward direction of gold remains unchanged.
Secretary-General António Guterres is expected to publicly disclose on Wednesday that he is in talks with Russia, Ukraine, Turkey, the United States and the European Union aimed at restoring grain shipments from Ukraine and fertilizer exports from Russia and Belarus, U.N. officials said.
The war in Ukraine has fueled a surge in global commodity prices. Ukraine, a major agricultural producer, used to export most of its goods through seaports, but since the outbreak of war on February 24, the country has been forced to use trains to cross its western border or export goods through small ports on the Danube. Russia and Belarus (sanctioned for supporting Russia) account for more than 40% of global potash exports.
How high the Fed will ultimately need to raise interest rates will largely depend on how quickly supply bottlenecks can be resolved. Companies are doing everything they can to make their supply chains work better again, but the Ukraine war is clearly not something they can control. The war will hinder the easing of high inflation and will delay the downward pace of gold prices.
On the daily chart, the price of gold started a ((c)) wave from $1,998, falling below the 100% target of $1,823, and the bottom support looked at the 138.2% target of $1,756. Wave ((c)) is a downward C wave that starts from $2070, which is a sub-wave of the correction (IV) wave that starts from $2075.
On the hourly chart, the price of gold has started a downward (iii) wave from $1,910, and is expected to fall below the 100% target of $1,783, and further test the 123.6% target of $1,753. Wave (iii) is a subwave of wave ((c)).
At GMT+8 20:14, spot gold fell 0.33% to US$1,808.96 per ounce; the main COMEX gold futures contract fell 0.66% to US$1,806.9 per ounce; the US dollar index rose 0.21% to 103.50.
Powell: There is no way out of fighting inflation
Federal Reserve Chairman Jerome Powell pledged on Tuesday (May 17) that the central bank will raise interest rates as needed, including above neutral levels, in order to stem the spike in inflation. Soaring inflation threatens the fundamentals of the economy, he said. A neutral interest rate ensures that economic activity is neither stimulated nor restricted.
Powell acknowledged that keeping inflation under control could lead to slower economic growth and that rising unemployment would be "painful." He said there was a "path" to the pace of price increases without a full-blown recession. But Powell stressed that if inflation does not fall, the Fed will not back down from raising interest rates.
What happens next — how much and how often the central bank raises interest rates — depends on how growth and inflation momentum evolve, Powell said, with the Fed reviewing economic readings at future meetings on a case-by-case basis.
Powell's remarks cemented expectations in the interest rate futures market that the Fed is expected to continue the pace of rate hikes in May at its next two meetings in June and July, and to raise the policy rate to no less than 2.75% by the end of the year. -3.00% range. The Federal Reserve raised interest rates by 50 basis points in May, the largest single rate hike in more than 20 years.
ING economists reported that the dollar's sharp pullback eased the overbought state in previous sessions, but expectations of aggressive Fed tightening are not conducive to continued dollar weakness. Taking this into account, the dollar index should be in More and more support is found below the 103.00 area.
Brad sings his praises
The U.S. economy is likely to continue growing at an above-trend rate for at least the next 18 months, and households are likely to keep spending as the effects of the pandemic recede, St. Louis Fed President Bullard said on Tuesday. This appears to downplay the risk of a recession that could come from tightening monetary policy by the Federal Reserve.
U.S. retail sales rose faster than expected in April, and March retail sales data was revised up, showing U.S. consumers were not hurt by the worst inflation in more than 40 years and showed no signs of weakness amid rising interest rates.
In his comments, Bullard said that with our long-term potential growth rate -- probably a little under 2%, 2.5% to 3% growth is fast, "that's where we're at... The U.S. labor market is very strong...household consumption is expected to be strong throughout the year."
So the Fed will not only keep raising interest rates, but probably at a very fast pace to restore the market's credibility in fighting inflation. The upward momentum of the dollar has not ended, and the overall downward direction of gold remains unchanged.
Commodity logistics urgently need to recover
Secretary-General António Guterres is expected to publicly disclose on Wednesday that he is in talks with Russia, Ukraine, Turkey, the United States and the European Union aimed at restoring grain shipments from Ukraine and fertilizer exports from Russia and Belarus, U.N. officials said.
The war in Ukraine has fueled a surge in global commodity prices. Ukraine, a major agricultural producer, used to export most of its goods through seaports, but since the outbreak of war on February 24, the country has been forced to use trains to cross its western border or export goods through small ports on the Danube. Russia and Belarus (sanctioned for supporting Russia) account for more than 40% of global potash exports.
How high the Fed will ultimately need to raise interest rates will largely depend on how quickly supply bottlenecks can be resolved. Companies are doing everything they can to make their supply chains work better again, but the Ukraine war is clearly not something they can control. The war will hinder the easing of high inflation and will delay the downward pace of gold prices.
Spot gold looks at $1753
On the daily chart, the price of gold started a ((c)) wave from $1,998, falling below the 100% target of $1,823, and the bottom support looked at the 138.2% target of $1,756. Wave ((c)) is a downward C wave that starts from $2070, which is a sub-wave of the correction (IV) wave that starts from $2075.
On the hourly chart, the price of gold has started a downward (iii) wave from $1,910, and is expected to fall below the 100% target of $1,783, and further test the 123.6% target of $1,753. Wave (iii) is a subwave of wave ((c)).
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