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Market News The spot gold price remained volatile near US$1760, benefiting from the decline in European and American stock markets, but the market was cautious before the FED resolution
The spot gold price remained volatile near US$1760, benefiting from the decline in European and American stock markets, but the market was cautious before the FED resolution
During the European session on September 21, the spot gold price remained within a narrow range of around 7 US dollars. The sharp drop in European and American stock markets overnight stimulated the market's risk aversion and supported the gold price. However, before the announcement of the Federal Reserve's decision on Wednesday, the market was still very cautious, and gold price volatility was limited.
2021-09-21
10639
On Tuesday (September 21) European time, the spot gold price remained within a narrow range of around 7 US dollars. The sharp drop in European and American stock markets overnight stimulated the market’s risk aversion and supported the gold price. However, before the announcement of the Federal Reserve's decision on Wednesday, the market was still very cautious, and gold price volatility was limited.
On September 20, local time this Monday, some markets in the Asia-Pacific region were closed due to the Mid-Autumn Festival. However, most of the stock markets in the US and Europe that were normally traded suffered a negative surprise. As of the close of the day, the Dow fell more than 600 points, the Nasdaq fell 2.19%, and the German DAX fell 2.31%.
In addition, European stocks also fell across the board. The German DAX index fell 2.31% to 15132.06 points, a four-month low; France's CAC40 index fell 1.74% to 6455.81 points; the British FTSE 100 index fell 0.86% to 6903.91 points; Italy's FTSE MIB index fell 2.57% to 25048.26 points.
Market participants analyzed that the four major reasons led to the sudden rise of panic in European and American stock markets, which led to a "Black Monday" sell-off.
The first and most important reason is that Yellen, the former chairman of the Federal Reserve and the current Secretary of the Treasury, warned on September 19 that if the US Congress does not quickly raise the federal government’s debt ceiling or suspend its effectiveness, the federal government may appear in October this year. Debt defaults will cause widespread "economic disaster". However, according to the latest news, some senators from the Republican Party of the United States still indicated that they would not vote in favor of raising the debt ceiling.
Second, the market is worried that the Fed will release a tightening signal and begin to tighten monetary policy early. At the Jackson Hole meeting at the end of August, Fed Chairman Powell signaled to the market that it may "shrink debt" (reducing the scale of debt purchases) during the year. The market generally paid attention to the specific time when the "debt reduction" started and the pace after it started.
Third, the new crown pneumonia epidemic in the United States is getting worse. According to the latest data from Johns Hopkins University in the United States, the cumulative number of deaths reported in the United States due to new coronary pneumonia has exceeded 675,000, even exceeding the number of deaths from the flu pandemic a century ago. In particular, the spread of mutant strains may bring uncertainty to the progress of the epidemic in the United States, economic recovery, and the outlook for monetary and fiscal policies.
Fourth, the weak performance of the Hong Kong stock market that day also caused investors in European and American stock markets to leave the market to a certain extent.
Many Wall Street institutions and related professionals believe that US stocks, which have been climbing continuously before, may be about to adjust downwards, and a round of decline may be "just beginning." However, there are differences in the industry as to the downside. The more optimistic believe that it is 5%-10%; the relatively pessimistic believe that, in the worst possible case, the US stock market may undergo a 20% downward adjustment.
According to the latest survey results released by Deutsche Bank, the bank recently conducted a survey of 550 global market experts, and 58% of them expect the US stock market to experience a 5%-10% consolidation before the end of the year.
Morgan Stanley's chief U.S. stock strategist Wilson said in the latest report that the agency has set the year-end target point for the S&P 500 index at 4000 points, which is nearly 10% lower than the closing point last Friday.
He also emphasized that as some economic indicators begin to deteriorate, the U.S. stock market may undergo a sharp correction. The U.S. stock market is currently at a "fork in the road" and may begin to go "downhill." Factors that may accelerate the market decline include declining corporate earnings in the US, weak consumer confidence, and poor economic data such as PMI. In addition, the end of the epidemic relief program may make the process of economic normalization more difficult than many people expected.
Spot gold price 4-hour chart
GMT+8 At 02:00 on Thursday (September 23), the Federal Reserve will announce its interest rate resolution and a summary of economic forecasts. Investors are concerned about when the Federal Reserve will begin to reduce the size of its monthly government bond purchases of $120 billion.
Fed officials will announce the latest estimates at the interest rate meeting this week, when they will reveal the time and frequency of interest rate hikes for the US economy in the next three years. Investors will be ready to speed up the pace of tightening.
The Fed publishes a "dot map" every quarter, which shows policymakers' forecasts on economic growth, employment and inflation, and the timing of interest rate hikes without anonymity.
The bitmap will show whether most policymakers have adhered to the recently expressed view that the impact of the new crown Delta variant virus on the economy is only short-lived. The virus currently causes turbulence and uncertainty and weakens economic activity. This week’s dot plot will also show for the first time Fed officials’ expectations for 2024.
Interest rates have been close to zero since the beginning of the new crown epidemic, and the Fed has promised not to raise borrowing costs until the economy has fully recovered. According to the latest framework of the Federal Reserve, this means that while achieving the 2% average inflation target, more attention will be paid to achieving maximum employment.
Roberto Perli, an analyst at Cornerstone Macro, said that we all know that dot plots are not promises or guarantees, but this is still the best way for the market to judge future policies, and risks are still biased to the upside.
Analysts expect the Fed’s September 21-22 policy meeting to open the door to reduce its monthly bond purchases. Fed officials believe that even if employment and product supply are restricted, demand directly affected by the asset purchase plan has rebounded, and the plan has produced results.
The reduction in debt purchases may be completed as early as mid-2022, clearing the way for the Fed to raise interest rates from near zero at any time thereafter. Analysts interviewed in the September survey predicted that US interest rates will remain near zero until 2023, but more than a quarter of the respondents predict that the Fed will raise interest rates next year.
If the Fed's median interest rate forecast for 2022 and 2023 remains unchanged, investors will focus on 2024, because once the rate hike begins, investors will analyze the rate of interest rate hikes. The forecast will also show how many policymakers, if any, believe that interest rates will remain unchanged until at least 2024. In June, 5 out of 18 decision makers believed that interest rates would remain unchanged before the end of 2023.
Currently, federal funds rate futures, which track short-term interest rate expectations, show that there will be one rate hike in 2023 and one or two more rate hikes in 2024, but the latest survey of primary market traders shows that there will be three more rate hikes. The Fed conducts this survey before each meeting to understand market expectations.
Capital Economics economist Michael Pierce said that if the Fed predicts three or more interest rate hikes in 2024 at this week’s meeting, it will send a hawkish signal that can offset any dovish messages about curtailing debt purchases. .
Overseas Network, September 21. The U.S. Treasury Department launched emergency cash savings measures last month to prevent the United States from defaulting trillions of dollars in federal debt, but Congress failed to extend the suspension of the debt ceiling before the six-week holiday. U.S. Treasury Secretary Yellen warned about this that this move would make the United States "trap into" a financial crisis.
According to the Russian Satellite News Agency, U.S. Treasury Secretary Yellen wrote in a column in the Wall Street Journal on Sunday (19th): "The overwhelming consensus of the U.S. economists and the Treasury Department The upper limit will lead to widespread economic disaster."
Yellen warned that by then millions of Americans may be in financial difficulties, nearly 50 million elderly people may stop receiving social insurance, the military is also unavailable, and millions of families relying on monthly child tax credits may experience delays. Tax refund. Yellen emphasized that "there is no valid reason to cause such a result."
When Yellen published this column, the US Congressional Democrats are facing increasing pressure. The White House requires them to vote to raise the debt ceiling before the cash runs out (as early as October this year) to repay the federal government’s existing debt. . Currently, the Democrats are considering resolving the debt ceiling deadlock with the Republicans in order to avoid a government shutdown. (Overseas Network Hou Xingchuan)
According to reports, the White House said on the 20th that the U.S. government plans to relax entry restrictions on foreign travelers "fully vaccinated against the new crown" from early November.
The White House Coordinator of Covid-19 Response, Jeffrey Zintz, said that the new regulations apply to all international flights arriving in the United States, and all foreign passengers must present a “fully vaccinated against COVID-19” certificate when entering the United States, and a certificate of negative COVID-19 test within 72 hours before departure. . International travelers who have been fully vaccinated do not need to be quarantined after entering the United States. The regulations will come into effect in early November so that relevant agencies and airlines can prepare.
Zintz said that the White House will follow the US Centers for Disease Control and Prevention's specific interpretation of "fully vaccinated", including which vaccines meet the regulatory requirements. In addition, the US Centers for Disease Control and Prevention plans to issue a "tracking order" that requires airlines to collect and retain contact information such as telephone numbers and email addresses of passengers arriving in the United States within 30 days to remind passengers of possible exposure to infection risks.
Zintz said that for U.S. citizens returning to the U.S. who have not received the new crown vaccine, the U.S. government will implement "stricter testing requirements," including proof of negative test results for the new crown within the day before departure and proof of payment of testing fees after returning to the U.S.
On the same day, the US government continued to extend the land-water travel restrictions with Canada and Mexico for one month to October 21. This land-water cross-border restriction order will be implemented in March 2020 and will be extended once a month. Starting from August 9 this year, Canada allows American citizens who have received the new crown vaccine to enter Canada.
The US government began to implement international travel restrictions at the beginning of the new crown epidemic last year, and it has continued to expand to new countries and regions. The media here quoted data from the American Aviation Association as saying that as of the end of August this year, the scale of international travel has shrunk by 43% compared to before the epidemic.
The American Travel Association previously estimated that if the United States’ international travel restrictions continue until the end of this year, it will cost the United States 1.1 million jobs and cause about 325 billion U.S. dollars in damage to the U.S. economy.
U.S. and European stock markets plummeted across the board to stimulate safe-haven support for gold prices
On September 20, local time this Monday, some markets in the Asia-Pacific region were closed due to the Mid-Autumn Festival. However, most of the stock markets in the US and Europe that were normally traded suffered a negative surprise. As of the close of the day, the Dow fell more than 600 points, the Nasdaq fell 2.19%, and the German DAX fell 2.31%.
In addition, European stocks also fell across the board. The German DAX index fell 2.31% to 15132.06 points, a four-month low; France's CAC40 index fell 1.74% to 6455.81 points; the British FTSE 100 index fell 0.86% to 6903.91 points; Italy's FTSE MIB index fell 2.57% to 25048.26 points.
Market participants analyzed that the four major reasons led to the sudden rise of panic in European and American stock markets, which led to a "Black Monday" sell-off.
The first and most important reason is that Yellen, the former chairman of the Federal Reserve and the current Secretary of the Treasury, warned on September 19 that if the US Congress does not quickly raise the federal government’s debt ceiling or suspend its effectiveness, the federal government may appear in October this year. Debt defaults will cause widespread "economic disaster". However, according to the latest news, some senators from the Republican Party of the United States still indicated that they would not vote in favor of raising the debt ceiling.
Second, the market is worried that the Fed will release a tightening signal and begin to tighten monetary policy early. At the Jackson Hole meeting at the end of August, Fed Chairman Powell signaled to the market that it may "shrink debt" (reducing the scale of debt purchases) during the year. The market generally paid attention to the specific time when the "debt reduction" started and the pace after it started.
Third, the new crown pneumonia epidemic in the United States is getting worse. According to the latest data from Johns Hopkins University in the United States, the cumulative number of deaths reported in the United States due to new coronary pneumonia has exceeded 675,000, even exceeding the number of deaths from the flu pandemic a century ago. In particular, the spread of mutant strains may bring uncertainty to the progress of the epidemic in the United States, economic recovery, and the outlook for monetary and fiscal policies.
Fourth, the weak performance of the Hong Kong stock market that day also caused investors in European and American stock markets to leave the market to a certain extent.
Many Wall Street institutions and related professionals believe that US stocks, which have been climbing continuously before, may be about to adjust downwards, and a round of decline may be "just beginning." However, there are differences in the industry as to the downside. The more optimistic believe that it is 5%-10%; the relatively pessimistic believe that, in the worst possible case, the US stock market may undergo a 20% downward adjustment.
According to the latest survey results released by Deutsche Bank, the bank recently conducted a survey of 550 global market experts, and 58% of them expect the US stock market to experience a 5%-10% consolidation before the end of the year.
Morgan Stanley's chief U.S. stock strategist Wilson said in the latest report that the agency has set the year-end target point for the S&P 500 index at 4000 points, which is nearly 10% lower than the closing point last Friday.
He also emphasized that as some economic indicators begin to deteriorate, the U.S. stock market may undergo a sharp correction. The U.S. stock market is currently at a "fork in the road" and may begin to go "downhill." Factors that may accelerate the market decline include declining corporate earnings in the US, weak consumer confidence, and poor economic data such as PMI. In addition, the end of the epidemic relief program may make the process of economic normalization more difficult than many people expected.
Spot gold price 4-hour chart
Market focus shifts to the Fed’s September resolution to be announced on Wednesday
GMT+8 At 02:00 on Thursday (September 23), the Federal Reserve will announce its interest rate resolution and a summary of economic forecasts. Investors are concerned about when the Federal Reserve will begin to reduce the size of its monthly government bond purchases of $120 billion.
Fed officials will announce the latest estimates at the interest rate meeting this week, when they will reveal the time and frequency of interest rate hikes for the US economy in the next three years. Investors will be ready to speed up the pace of tightening.
The Fed publishes a "dot map" every quarter, which shows policymakers' forecasts on economic growth, employment and inflation, and the timing of interest rate hikes without anonymity.
The bitmap will show whether most policymakers have adhered to the recently expressed view that the impact of the new crown Delta variant virus on the economy is only short-lived. The virus currently causes turbulence and uncertainty and weakens economic activity. This week’s dot plot will also show for the first time Fed officials’ expectations for 2024.
Interest rates have been close to zero since the beginning of the new crown epidemic, and the Fed has promised not to raise borrowing costs until the economy has fully recovered. According to the latest framework of the Federal Reserve, this means that while achieving the 2% average inflation target, more attention will be paid to achieving maximum employment.
Roberto Perli, an analyst at Cornerstone Macro, said that we all know that dot plots are not promises or guarantees, but this is still the best way for the market to judge future policies, and risks are still biased to the upside.
Analysts expect the Fed’s September 21-22 policy meeting to open the door to reduce its monthly bond purchases. Fed officials believe that even if employment and product supply are restricted, demand directly affected by the asset purchase plan has rebounded, and the plan has produced results.
The reduction in debt purchases may be completed as early as mid-2022, clearing the way for the Fed to raise interest rates from near zero at any time thereafter. Analysts interviewed in the September survey predicted that US interest rates will remain near zero until 2023, but more than a quarter of the respondents predict that the Fed will raise interest rates next year.
If the Fed's median interest rate forecast for 2022 and 2023 remains unchanged, investors will focus on 2024, because once the rate hike begins, investors will analyze the rate of interest rate hikes. The forecast will also show how many policymakers, if any, believe that interest rates will remain unchanged until at least 2024. In June, 5 out of 18 decision makers believed that interest rates would remain unchanged before the end of 2023.
Currently, federal funds rate futures, which track short-term interest rate expectations, show that there will be one rate hike in 2023 and one or two more rate hikes in 2024, but the latest survey of primary market traders shows that there will be three more rate hikes. The Fed conducts this survey before each meeting to understand market expectations.
Capital Economics economist Michael Pierce said that if the Fed predicts three or more interest rate hikes in 2024 at this week’s meeting, it will send a hawkish signal that can offset any dovish messages about curtailing debt purchases. .
U.S. Treasury Secretary warns that debt deadlock may cause the U.S. to fall into economic disaster to support gold prices
Overseas Network, September 21. The U.S. Treasury Department launched emergency cash savings measures last month to prevent the United States from defaulting trillions of dollars in federal debt, but Congress failed to extend the suspension of the debt ceiling before the six-week holiday. U.S. Treasury Secretary Yellen warned about this that this move would make the United States "trap into" a financial crisis.
According to the Russian Satellite News Agency, U.S. Treasury Secretary Yellen wrote in a column in the Wall Street Journal on Sunday (19th): "The overwhelming consensus of the U.S. economists and the Treasury Department The upper limit will lead to widespread economic disaster."
Yellen warned that by then millions of Americans may be in financial difficulties, nearly 50 million elderly people may stop receiving social insurance, the military is also unavailable, and millions of families relying on monthly child tax credits may experience delays. Tax refund. Yellen emphasized that "there is no valid reason to cause such a result."
When Yellen published this column, the US Congressional Democrats are facing increasing pressure. The White House requires them to vote to raise the debt ceiling before the cash runs out (as early as October this year) to repay the federal government’s existing debt. . Currently, the Democrats are considering resolving the debt ceiling deadlock with the Republicans in order to avoid a government shutdown. (Overseas Network Hou Xingchuan)
US relaxes entry ban on 33 countries, supports risk appetite and unfavorable gold prices
According to reports, the White House said on the 20th that the U.S. government plans to relax entry restrictions on foreign travelers "fully vaccinated against the new crown" from early November.
The White House Coordinator of Covid-19 Response, Jeffrey Zintz, said that the new regulations apply to all international flights arriving in the United States, and all foreign passengers must present a “fully vaccinated against COVID-19” certificate when entering the United States, and a certificate of negative COVID-19 test within 72 hours before departure. . International travelers who have been fully vaccinated do not need to be quarantined after entering the United States. The regulations will come into effect in early November so that relevant agencies and airlines can prepare.
Zintz said that the White House will follow the US Centers for Disease Control and Prevention's specific interpretation of "fully vaccinated", including which vaccines meet the regulatory requirements. In addition, the US Centers for Disease Control and Prevention plans to issue a "tracking order" that requires airlines to collect and retain contact information such as telephone numbers and email addresses of passengers arriving in the United States within 30 days to remind passengers of possible exposure to infection risks.
Zintz said that for U.S. citizens returning to the U.S. who have not received the new crown vaccine, the U.S. government will implement "stricter testing requirements," including proof of negative test results for the new crown within the day before departure and proof of payment of testing fees after returning to the U.S.
On the same day, the US government continued to extend the land-water travel restrictions with Canada and Mexico for one month to October 21. This land-water cross-border restriction order will be implemented in March 2020 and will be extended once a month. Starting from August 9 this year, Canada allows American citizens who have received the new crown vaccine to enter Canada.
The US government began to implement international travel restrictions at the beginning of the new crown epidemic last year, and it has continued to expand to new countries and regions. The media here quoted data from the American Aviation Association as saying that as of the end of August this year, the scale of international travel has shrunk by 43% compared to before the epidemic.
The American Travel Association previously estimated that if the United States’ international travel restrictions continue until the end of this year, it will cost the United States 1.1 million jobs and cause about 325 billion U.S. dollars in damage to the U.S. economy.
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