Market News Spot gold runs at a high level, the U.S. index hits a 14-month high, and the FED is expected to raise interest rates three times next year
Spot gold runs at a high level, the U.S. index hits a 14-month high, and the FED is expected to raise interest rates three times next year
On November 12, spot gold fell back, but it was not far from the new high of US$1,685.55 per ounce set this week since June 15. The US dollar index continued to hit a new high since late July 2020, reaching 95.266. For now, Biden's economic options seem irrelevant to voters who are struggling to cope with soaring food and fuel prices. The latest data from CME's "Federal Reserve Watch" tool shows that the probability that the Fed will raise interest rates at least three times before the end of 2022 is 56.2%.
2021-11-12
7832
On Friday (November 12), spot gold fell back, but it was not far from the new high of US$1,685.55 per ounce set this week since June 15th. The US dollar index continued to hit a new high since late July 2020, reaching 95.266. As the U.S. inflation level hit a record high in decades, the market is betting that the Federal Reserve will accelerate the pace of tightening monetary policy.
At 20:22 GMT+8, spot gold fell 0.50% to US$1852.69 per ounce; the main COMEX gold contract fell 0.49% to US$1854.8 per ounce; the U.S. dollar index fell 0.06% to 95.117.
The U.S. consumer price index rose across the board in October, with a year-on-year growth rate of 6.2%, a record high since 1990. This has raised questions about the Fed’s “temporary theory” of inflationary pressures, and triggered investors’ expectations that it will be even greater than before. Speculation of raising interest rates early.
The surge in inflation has spread to the realm of rents. During the epidemic, the federal government’s decree restricting landlords from driving away tenants has expired, and landlords have the right to re-adjust rents. Given the shortage of supply in the job market, it is expected that the possibility of rent increases in the next few months is relatively high.
Vassili Serebriakov, a foreign exchange strategist at UBS, said: "The path of least resistance in the short term seems to be a higher dollar...Strong inflation weakens the theory of transitory, which means the Fed may need to tighten monetary policy sooner."
The latest data from the CME "Federal Reserve Observation" tool shows that the probability that the Fed will raise interest rates by at least 25 basis points in June 2022 is 68.8%, and the probability of a cumulative interest rate hike of at least 75 basis points (three times) before the end of the year is 56.2%. Before the release of October inflation data, the market expected the Fed to raise interest rates twice in 2022.
Mizuho strategists said: “We don’t think (the dollar’s rally) will end, and we expect that the dollar will remain strong in the first half of 2022. Provide support for the U.S. dollar."
Commonwealth Bank of Australia strategist Kimberley Mundy wrote in a report to clients: "We still believe that the market (in anticipation of the Fed's interest rate hike) has room for further strengthening, especially in 2023, which may further support the strengthening of the dollar. ."
Leandro Galli, senior portfolio manager of the Acredits Global Fixed Income Team, believes that the market has neither fully expected the U.S. inflation rate to rise in the long term, nor adequately set the price for the Fed’s ability to control inflation. Don’t speed up."
Over the past few months, inflation and supply chain issues have been plagued by the US economy, and the latest October inflation data has also brought a new sense of urgency to US President Biden. In a poll conducted by NBC at the end of October, only 42% of Americans recognized Biden's work performance, and 71% of voters believed that the country was heading in the wrong direction.
When Biden visited Baltimore, he said: "Too many people are upset about the economy, and we all know why. They see higher prices, whether they shop offline or online, they can’t find what they want, and they don’t know. When will it be available. We are tracking these issues and trying to figure out how to solve them."
However, economists said that no matter whether Biden or anyone else is the president of the United States, the current high inflation situation cannot be prevented. The root cause of the current sharp increase in prices is the violent release of pent-up demand after the epidemic has eased, and the chaotic global supply chain.
Morgan Stanley analysts wrote: "The interruption of the global supply chain has caused shortages in areas such as energy and semiconductors. These conditions may continue into next year, and prices will face higher upward pressure in the short term."
For now, Biden's economic options seem irrelevant to voters who are struggling to cope with soaring food and fuel prices. The Fed and the White House are temporarily unable to do anything about high inflation. Inflation expectations will continue to heat up. It seems undisputed to do more gold on dips.
Nonetheless, Republicans are still eager to link the current pandemic-related inflation and supply chain dilemmas with Biden's broader economic agenda—especially his two major bills on infrastructure and social spending.
US Senator Shelley Moore Capito said: "To be honest, I think this is a reckless bill... We have injected a lot of money into the economy. We need to sit down, wait and define demand." She pointed out that the United States is already in the new crown rescue. The cost is as high as $6 trillion, and Congress should stop and see how effective the previous investment has been.
Biden's "Rebuild Better" plan intends to invest $1.85 trillion in the next 10 years to strengthen the US social safety net. But the plan could not even win unanimous support from the Democratic Party, and Manchin, a moderate Democrat, clearly opposed it.
Manchin wrote on Twitter: "From all angles, the threat that record inflation poses to the American people is not'temporary', but is getting more and more serious. From grocery stores to gas stations, Americans know High inflation is real, and Washington can no longer ignore the economic pain that Americans feel every day. In the past three months, I have been bluntly expressing my concerns... Historic inflation of the American family bill."
In the long run, Biden believes that his "rebuild better" agenda will reduce inflationary pressures by increasing labor participation rates and overall productivity. But these long-term effects will take years to affect the economy. With the holiday shopping season approaching at the end of the year, consumers are facing the dilemma of a serious shortage of goods. High inflation will curb consumer spending, and people will tend to choose gold to fight inflation.
Spot gold looks at $1887
On the hourly chart, the price of gold is in the upward wave iii starting from $1,759. Looking at the market outlook, the target level of 123.6% is $1873 and the target level of 138.2% is $1887. Wave iii is a sub-wave of the upward wave (iii) that started at $1721.
At 20:22 GMT+8, spot gold fell 0.50% to US$1852.69 per ounce; the main COMEX gold contract fell 0.49% to US$1854.8 per ounce; the U.S. dollar index fell 0.06% to 95.117.
The U.S. consumer price index rose across the board in October, with a year-on-year growth rate of 6.2%, a record high since 1990. This has raised questions about the Fed’s “temporary theory” of inflationary pressures, and triggered investors’ expectations that it will be even greater than before. Speculation of raising interest rates early.
The surge in inflation has spread to the realm of rents. During the epidemic, the federal government’s decree restricting landlords from driving away tenants has expired, and landlords have the right to re-adjust rents. Given the shortage of supply in the job market, it is expected that the possibility of rent increases in the next few months is relatively high.
Vassili Serebriakov, a foreign exchange strategist at UBS, said: "The path of least resistance in the short term seems to be a higher dollar...Strong inflation weakens the theory of transitory, which means the Fed may need to tighten monetary policy sooner."
The latest data from the CME "Federal Reserve Observation" tool shows that the probability that the Fed will raise interest rates by at least 25 basis points in June 2022 is 68.8%, and the probability of a cumulative interest rate hike of at least 75 basis points (three times) before the end of the year is 56.2%. Before the release of October inflation data, the market expected the Fed to raise interest rates twice in 2022.
Mizuho strategists said: “We don’t think (the dollar’s rally) will end, and we expect that the dollar will remain strong in the first half of 2022. Provide support for the U.S. dollar."
Commonwealth Bank of Australia strategist Kimberley Mundy wrote in a report to clients: "We still believe that the market (in anticipation of the Fed's interest rate hike) has room for further strengthening, especially in 2023, which may further support the strengthening of the dollar. ."
Leandro Galli, senior portfolio manager of the Acredits Global Fixed Income Team, believes that the market has neither fully expected the U.S. inflation rate to rise in the long term, nor adequately set the price for the Fed’s ability to control inflation. Don’t speed up."
Biden faces a new sense of urgency
Over the past few months, inflation and supply chain issues have been plagued by the US economy, and the latest October inflation data has also brought a new sense of urgency to US President Biden. In a poll conducted by NBC at the end of October, only 42% of Americans recognized Biden's work performance, and 71% of voters believed that the country was heading in the wrong direction.
When Biden visited Baltimore, he said: "Too many people are upset about the economy, and we all know why. They see higher prices, whether they shop offline or online, they can’t find what they want, and they don’t know. When will it be available. We are tracking these issues and trying to figure out how to solve them."
However, economists said that no matter whether Biden or anyone else is the president of the United States, the current high inflation situation cannot be prevented. The root cause of the current sharp increase in prices is the violent release of pent-up demand after the epidemic has eased, and the chaotic global supply chain.
Morgan Stanley analysts wrote: "The interruption of the global supply chain has caused shortages in areas such as energy and semiconductors. These conditions may continue into next year, and prices will face higher upward pressure in the short term."
For now, Biden's economic options seem irrelevant to voters who are struggling to cope with soaring food and fuel prices. The Fed and the White House are temporarily unable to do anything about high inflation. Inflation expectations will continue to heat up. It seems undisputed to do more gold on dips.
Biden's agenda is questioned
Nonetheless, Republicans are still eager to link the current pandemic-related inflation and supply chain dilemmas with Biden's broader economic agenda—especially his two major bills on infrastructure and social spending.
US Senator Shelley Moore Capito said: "To be honest, I think this is a reckless bill... We have injected a lot of money into the economy. We need to sit down, wait and define demand." She pointed out that the United States is already in the new crown rescue. The cost is as high as $6 trillion, and Congress should stop and see how effective the previous investment has been.
Biden's "Rebuild Better" plan intends to invest $1.85 trillion in the next 10 years to strengthen the US social safety net. But the plan could not even win unanimous support from the Democratic Party, and Manchin, a moderate Democrat, clearly opposed it.
Manchin wrote on Twitter: "From all angles, the threat that record inflation poses to the American people is not'temporary', but is getting more and more serious. From grocery stores to gas stations, Americans know High inflation is real, and Washington can no longer ignore the economic pain that Americans feel every day. In the past three months, I have been bluntly expressing my concerns... Historic inflation of the American family bill."
In the long run, Biden believes that his "rebuild better" agenda will reduce inflationary pressures by increasing labor participation rates and overall productivity. But these long-term effects will take years to affect the economy. With the holiday shopping season approaching at the end of the year, consumers are facing the dilemma of a serious shortage of goods. High inflation will curb consumer spending, and people will tend to choose gold to fight inflation.
Spot gold looks at $1887
On the hourly chart, the price of gold is in the upward wave iii starting from $1,759. Looking at the market outlook, the target level of 123.6% is $1873 and the target level of 138.2% is $1887. Wave iii is a sub-wave of the upward wave (iii) that started at $1721.
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