Spot gold prices rebounded continuously this week, but it is still difficult to get out of the Fed’s "Five Finger Mountain"

After falling by $50 last week, spot gold prices have seen encouraging double-digit gains this week. The rise in risk aversion in the market triggered stock market volatility earlier this week. In addition, the OECD has also raised the Group of Seven ( G7) The inflation expectations of almost all member states for the rest of this year and next year. On Tuesday (September 21), spot gold once rebounded above 1780. On Wednesday (September 22), the Asian market was in early trading. The price of gold is currently trading at around US$1775. . However, the Fed's interest rate resolution meeting is currently, and the market expects that the Fed's meeting will lay the foundation for announcing the reduction in November. Under such pressure, the prospect of gold prices is still not optimistic.

Two major institutions emphasize cautious reductions, and gold prices are supported

The Organization for Economic Cooperation and Development (OECD) stated in its Economic Outlook Update on Tuesday (September 21) that global economic growth is expected to rebound rapidly. Despite the soaring inflation, governments and central banks are now withdrawing unconventional support for their economies. The measures are too early. At the same time, the United Nations Conference on Trade and Development report stated that growing inequality between developed and developing countries may hinder economic development.

The OECD said in a report: "Short-term inflation risks increase, especially if consumer demand is stronger than expected, or supply shortages take a long time to overcome. Loose monetary policy should be maintained, but tolerance Clear guidance is given on the scope and extent of excessive inflation."

According to the OECD, it is expected that the inflation rate in the United States will remain above 3% next year. The OECD said: "Inflation is expected to stabilize above the pre-epidemic average. After years of inflation below the target level, this is welcome, but it also points to potential risks."

For the Fed, this means that it must be extra cautious when it comes to when and how much to reduce its $120 billion in asset purchases per month. With the Fed meeting approaching, gold prices are still facing major headwinds, and any hint that the Fed will reduce the size of bond purchases will again depress gold prices.

The Fed's resolution is approaching, and it is expected to lay the foundation for the reduction, and the price of gold faces downside risks

Deutsche Commerzbank analyst Daniel Briesemann said, "The strength of the U.S. dollar, coupled with the expectation that the Fed's monetary policy decision may be hawkish, seems to have been controlling the price of gold."

BBH Global Currency Strategy believes that fluctuations caused by market sentiment will not have any impact on the Fed’s considerations or decisions. Win Thin, BBH's head of foreign exchange strategy, said: "The Fed is expected to take a tough stance, because the official statement and meeting minutes should continue to lay the foundation for reducing debt purchases this year."

Thin added that the Fed is expected to officially announce a reduction in bond purchases at its November meeting, starting in December. The Fed will also publish a series of economic forecasts, including dot plots. Most analysts hope to hear about the reduction in the size of bond purchases, but it is expected that this meeting will not make a formal statement to reduce the size of bonds.

Bill Diviney, senior U.S. analyst at ABN AMRO, said: "Most of the market expects that the meeting will not officially announce a reduction, but there may be some changes in the policy statement, suggesting that the scale of bond purchases will be announced soon. Specifically, the Fed may adjust 7 Part of the policy statement of the month links the reduction in the pace of asset purchases with progress in achieving its goals. The economy has made further progress towards these goals. These adjustments will prove that the pace of asset purchases will slow in future meetings. .

Commodity strategists at TD Securities said the Fed’s statement could have a devastating effect on precious metals, especially if the latest dot chart is hawkish.

Strategists said: "Looking at the last dot plot, as long as two officials raise their expectations, the overall median expectation will be advanced. In this context, although the term "stagflation" has gradually attracted attention, Investors expect a period of high inflation and slower growth, but this has not yet translated into additional interest in gold."

Edward Moya, senior market analyst at OANDA, also pointed out that investors have begun to digest the possibility of an eagle in the Fed's policy statement in advance, which may hurt the rebound in gold prices. At the same time, facing strong resistance at the $1,800 level, the rebound in gold should soon begin to lose momentum.


(Spot gold daily chart)

At 07:54 on September 22, GMT+8, spot gold was quoted at $1,774.76 per ounce.