Market News Spot gold is temporarily stable, but three factors suggest that the FED is getting rid of the shackles as soon as possible
Spot gold is temporarily stable, but three factors suggest that the FED is getting rid of the shackles as soon as possible
On November 25, spot gold remained stable due to a slight correction in the US dollar index. However, the newly released minutes of the Fed meeting showed a more hawkish attitude among the decision-makers, and the continued strong US economic data is expected to prompt Fed policymakers to accelerate their tightening pace. The Fed's interest rate outlook is bullish, and interest rate hikes will increase the opportunity cost of holding gold as a non-yielding asset. According to data provided by the polling company Gallup, 7% of people said that inflation is their main anxiety about the outlook for the economy, and this proportion has set a new high in the past 20 years.
2021-11-25
10723
On Thursday (November 25), spot gold remained stable due to a slight correction in the US dollar index. However, the newly released minutes of the Fed meeting showed a more hawkish attitude among the decision-makers, and the continued strong US economic data is expected to prompt Fed policymakers to accelerate their tightening pace.
At 19:54 GMT+8, spot gold rose by 0.14% to US$1,79.16 per ounce; the main COMEX gold contract rose by 0.37% to US$1,793.5 per ounce; the US dollar index fell by 0.08% to 96.734.
The US dollar index hit a new high of 96.938 overnight since early July 2020, due to the bullish outlook for the Fed's interest rate. The interest rate hike will increase the opportunity cost of holding non-interest-bearing asset gold, and the price of gold overnight refreshed its lowest point since November 4 to $1,778.70 per ounce.
The minutes of the Fed’s November policy meeting released overnight showed that the Fed’s anxiety about rising inflation is deepening. More policymakers have hinted that the pressure brought by high prices may be more lasting. If inflation remains high, they are open to speeding up the end of bond purchase plans and speeding up the pace of interest rate hikes.
The Fed’s policymakers unanimously decided at the November meeting to start reducing the Fed’s monthly purchases of US$120 billion in public debt and mortgage-backed securities. The process is scheduled to be completed in June next year. However, the minutes of the meeting showed that some people at that time supported reducing the scale of debt purchases at a faster pace.
Paul Ashworth, chief U.S. analyst at Capital Economics, said: "(The Policy Committee) has clearly realized that even if the inflation rate drops, it may remain above the target level for a long time."
Michael Feroli, chief U.S. economic analyst at JPMorgan Chase, said: "In May (the Federal Reserve) can easily set aside this issue, but they have paid more and more attention to this issue every month afterwards. In view of the improvement in the labor market... The closer they are to full employment, they may be able to act more confidently."
Kathy Bostjancic, chief U.S. financial analyst at Oxford Economics, said: “Perhaps the compromise they can make is not to raise interest rates too early or too aggressively, but to accelerate the recovery of stimulus slightly.” She also said that inflation is expected to be next year. It peaked in the first quarter, and then gradually slowed down.
Yes Securities analyst Hitesh Jain said: “As the market digests some monetary policy normalization, this should depress gold prices in the short term. But considering the fiscal burden of high interest rates and accumulated huge government debt, major central banks are unlikely Raise interest rates drastically."
When nominating Powell for re-election as Fed chairman, US President Biden made it clear that both the government and the Fed will take measures to solve the problem of soaring prices of daily necessities such as food, gasoline and rent. Although the surge in inflation in late spring and summer is considered temporary, concerns within the Fed have intensified as the annual rate of inflation rose to a 31-year high in October.
Economic data released overnight showed that last week the number of initial jobless claims in the United States fell to the lowest level since 1969, and the Fed’s favorite inflation indicator, the PCE annual rate, continued to exceed its 2% target set by more than twice in October. This poses a test of the Fed's "inflationary tentative theory" hypothesis.
Goldman Sachs’s strategists said in a daily report on Thursday that starting from January next year, the Fed may double the rate at which debt purchases are cut to $30 billion, and end its debt purchases during the epidemic by mid-March. plan. Nevertheless, Goldman Sachs expects the Fed to raise interest rates only in June, raising interest rates three times in 2022.
The agency’s analysts, headed by Jan Hatzius, said in a client report: “It is becoming more open to accelerating the pace of reduction, which may reflect slightly higher than expected inflation in the past two months, and Fed officials’ I feel more assured that the pace will not impact the financial market."
San Francisco Fed Chairman Daley said on Wednesday that if employment and inflation data remain stable, she is open to ending the bond purchase plan sooner. She expects the Federal Reserve Policy Committee to raise interest rates once or twice next year. Daley is regarded as the most cautious official at the Fed's decision-making level.
Since the November meeting, more and more policymakers have called for an acceleration of this pace, as inflation continues to be high and the job market has become stronger. Doing so allows the Fed to have more flexibility to raise the federal funds rate from its current near-zero level early next year if needed.
National Australia Bank (NAB) Economic Director Tapas Strickland stated in a report to clients: "U.S. economic data has boosted the dollar, and Daley, who is considered dovish, made slightly hawkish remarks as a factor."
As Chairman Powell looks forward to continuing to take charge of the Federal Reserve for four years, attention has begun to turn to whether he and other policy makers must quickly end the emergency support measures for the US economy in the face of high inflation.
U.S. President Biden and Fed Chairman Powell emphasized earlier this week that they will take measures to solve the problem of rising prices of daily necessities such as food, gasoline and rent. But few economists or investors believe that inflation will cool in the short term. This means that everyone from the president to everyday voters may need to continue to be patient in order to tide over the difficulties.
Jason Furman, an economist during the Obama administration and former chairman of the White House Council of Economic Advisers, said: “I don’t think (the decision-makers) have the will to assure people that inflation will disappear. I think the most difficult thing to communicate is that not every issue is There are solutions. To heal our economy, some things need to be done is to be patient. No matter who is the president, this is a very difficult message to convey."
According to data provided by the public opinion polling firm Gallup, 7% of people said that inflation is their main anxiety about the outlook for the economy, and this proportion has set a new high in more than 20 years. You know, in September, the ratio was only 1%.
Inflation has an unpleasant feature, and people will regard current price increases as a guide to future price trends. In other words, inflation expectations themselves will lead to new inflation. If central banks of various countries adhere to the normalization process of moderate monetary policy, it will be difficult for gold prices to open up new downside space.
On the daily chart, the price of gold is in a downward ((Z)) wave that started from US$1,877. It has fallen below the 38.2% target of US$1787, and further dropped to the 61.8% target of US$1731. The ((Z)) wave is a sub-wave of the IV wave that started from 2075 USD.
At 19:54 GMT+8, spot gold rose by 0.14% to US$1,79.16 per ounce; the main COMEX gold contract rose by 0.37% to US$1,793.5 per ounce; the US dollar index fell by 0.08% to 96.734.
The US dollar index hit a new high of 96.938 overnight since early July 2020, due to the bullish outlook for the Fed's interest rate. The interest rate hike will increase the opportunity cost of holding non-interest-bearing asset gold, and the price of gold overnight refreshed its lowest point since November 4 to $1,778.70 per ounce.
Fed Minutes: Be Open to Accelerating Tightening
The minutes of the Fed’s November policy meeting released overnight showed that the Fed’s anxiety about rising inflation is deepening. More policymakers have hinted that the pressure brought by high prices may be more lasting. If inflation remains high, they are open to speeding up the end of bond purchase plans and speeding up the pace of interest rate hikes.
The Fed’s policymakers unanimously decided at the November meeting to start reducing the Fed’s monthly purchases of US$120 billion in public debt and mortgage-backed securities. The process is scheduled to be completed in June next year. However, the minutes of the meeting showed that some people at that time supported reducing the scale of debt purchases at a faster pace.
Paul Ashworth, chief U.S. analyst at Capital Economics, said: "(The Policy Committee) has clearly realized that even if the inflation rate drops, it may remain above the target level for a long time."
Michael Feroli, chief U.S. economic analyst at JPMorgan Chase, said: "In May (the Federal Reserve) can easily set aside this issue, but they have paid more and more attention to this issue every month afterwards. In view of the improvement in the labor market... The closer they are to full employment, they may be able to act more confidently."
Kathy Bostjancic, chief U.S. financial analyst at Oxford Economics, said: “Perhaps the compromise they can make is not to raise interest rates too early or too aggressively, but to accelerate the recovery of stimulus slightly.” She also said that inflation is expected to be next year. It peaked in the first quarter, and then gradually slowed down.
Yes Securities analyst Hitesh Jain said: “As the market digests some monetary policy normalization, this should depress gold prices in the short term. But considering the fiscal burden of high interest rates and accumulated huge government debt, major central banks are unlikely Raise interest rates drastically."
Fiery data scorches the Fed
When nominating Powell for re-election as Fed chairman, US President Biden made it clear that both the government and the Fed will take measures to solve the problem of soaring prices of daily necessities such as food, gasoline and rent. Although the surge in inflation in late spring and summer is considered temporary, concerns within the Fed have intensified as the annual rate of inflation rose to a 31-year high in October.
Economic data released overnight showed that last week the number of initial jobless claims in the United States fell to the lowest level since 1969, and the Fed’s favorite inflation indicator, the PCE annual rate, continued to exceed its 2% target set by more than twice in October. This poses a test of the Fed's "inflationary tentative theory" hypothesis.
Goldman Sachs’s strategists said in a daily report on Thursday that starting from January next year, the Fed may double the rate at which debt purchases are cut to $30 billion, and end its debt purchases during the epidemic by mid-March. plan. Nevertheless, Goldman Sachs expects the Fed to raise interest rates only in June, raising interest rates three times in 2022.
The agency’s analysts, headed by Jan Hatzius, said in a client report: “It is becoming more open to accelerating the pace of reduction, which may reflect slightly higher than expected inflation in the past two months, and Fed officials’ I feel more assured that the pace will not impact the financial market."
San Francisco Fed Chairman Daley said on Wednesday that if employment and inflation data remain stable, she is open to ending the bond purchase plan sooner. She expects the Federal Reserve Policy Committee to raise interest rates once or twice next year. Daley is regarded as the most cautious official at the Fed's decision-making level.
Since the November meeting, more and more policymakers have called for an acceleration of this pace, as inflation continues to be high and the job market has become stronger. Doing so allows the Fed to have more flexibility to raise the federal funds rate from its current near-zero level early next year if needed.
National Australia Bank (NAB) Economic Director Tapas Strickland stated in a report to clients: "U.S. economic data has boosted the dollar, and Daley, who is considered dovish, made slightly hawkish remarks as a factor."
Biden's difficulties
As Chairman Powell looks forward to continuing to take charge of the Federal Reserve for four years, attention has begun to turn to whether he and other policy makers must quickly end the emergency support measures for the US economy in the face of high inflation.
U.S. President Biden and Fed Chairman Powell emphasized earlier this week that they will take measures to solve the problem of rising prices of daily necessities such as food, gasoline and rent. But few economists or investors believe that inflation will cool in the short term. This means that everyone from the president to everyday voters may need to continue to be patient in order to tide over the difficulties.
Jason Furman, an economist during the Obama administration and former chairman of the White House Council of Economic Advisers, said: “I don’t think (the decision-makers) have the will to assure people that inflation will disappear. I think the most difficult thing to communicate is that not every issue is There are solutions. To heal our economy, some things need to be done is to be patient. No matter who is the president, this is a very difficult message to convey."
According to data provided by the public opinion polling firm Gallup, 7% of people said that inflation is their main anxiety about the outlook for the economy, and this proportion has set a new high in more than 20 years. You know, in September, the ratio was only 1%.
Inflation has an unpleasant feature, and people will regard current price increases as a guide to future price trends. In other words, inflation expectations themselves will lead to new inflation. If central banks of various countries adhere to the normalization process of moderate monetary policy, it will be difficult for gold prices to open up new downside space.
Spot gold short-term look at $1731
On the daily chart, the price of gold is in a downward ((Z)) wave that started from US$1,877. It has fallen below the 38.2% target of US$1787, and further dropped to the 61.8% target of US$1731. The ((Z)) wave is a sub-wave of the IV wave that started from 2075 USD.
Bonus rebate to help investors grow in the trading world!
Or try Free Demo Trading