简体中文
ภาษาไทย
繁體中文
Indonesia
Gold trading reminder: The US dollar continues to strengthen, gold prices are under pressure for six consecutive declines, pay attention to US CPI data
2024-10-10
254
In the early Asian session on Thursday (October 10), spot gold fluctuated in a narrow range and is currently trading around $2,608.99/ounce. Gold prices continued to weaken on Wednesday, falling for the sixth consecutive day, hitting an intraday low of $2,605.10/ounce and closing at $2,607.66/ounce. The rise in the US dollar refreshed a high of more than one and a half months, and the expectation of a sharp interest rate cut by the Federal Reserve in November weakened, and the US bond yield refreshed a high of more than two months.
Tai Wong, an independent metals trader, said: "The market is immobile because a strong jobs report may require the Federal Open Market Committee (FOMC) to reassess the situation. This is why gold has not had a big move and looks to be falling for the sixth consecutive trading day, but the pullback is not large."
He also said: "The dollar has risen sharply in the past few trading days, adding downward pressure on gold."
The dollar index hit a nearly two-month high, making gold more expensive for investors holding other currencies. U.S. bond yields continue to rise, increasing the opportunity cost of holding gold.
The Federal Reserve cut its benchmark policy rate by 50 basis points at its September 17-18 meeting, and the minutes of the meeting showed that the pace of future rate cuts will not be set by the initial sharp rate cut action.
CME FedWatch Tool shows that the market currently believes that the probability of the Fed cutting interest rates by 25 basis points next month has dropped to 70.4% (87% the previous day); the probability of no interest rate cut in November has risen to 29.6% (13% the previous day).
Logan, president of the Federal Reserve Bank of Dallas, said that she supports the decision to cut interest rates sharply last month, but considering the "still real" upside risks facing inflation and the "significant uncertainty" in the economic outlook, she hopes that future interest rate cuts will be smaller.
However, the geopolitical situation remains tense, helping gold prices to stay above the 2,600 mark. At dawn on the 10th local time, Israel launched a new round of air strikes on the southern suburbs of Beirut. Earlier in the day, the Israeli Defense Forces issued a new emergency warning to residents in the southern suburbs of Beirut, Lebanon, requiring residents of a building in and around the Haret Herik area to evacuate immediately and stay at least 500 meters away. The Israeli military said it would soon take action against this target.
Investors are currently waiting for the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data to be released on Thursday and Friday, respectively, to further understand the outlook for interest rates. In addition, the changes in the number of initial jobless claims in the United States will also be released on this trading day, and investors also need to pay attention to it; in addition, continue to pay attention to the speeches of Federal Reserve officials and news related to the geopolitical situation.
Fed's Logan calls for 'gradual' rate cuts, says 'no rush'
Dallas Fed President Logan said on Wednesday she supports last month's big rate cut but hopes future rate cuts will be smaller given the "still real" upside risks to inflation and "significant uncertainties" about the economic outlook.
"Following last month's 50 basis point reduction in the federal funds rate, a more gradual path back to the normal policy stance may be appropriate from now on to best balance the risks facing our dual mandate," Logan said in his first public remarks since the Fed cut rates three weeks ago.
The Fed "should not rush to lower the federal funds rate target to 'normal' or 'neutral' levels but should do so gradually while monitoring developments in financial conditions, consumption, wages, and prices."
In prepared remarks at an energy conference hosted by the Greater Houston Partnership, Logan laid out a list of reasons to move slowly, while noting that inflationary gains are broadly based and that the labor market has cooled.
“I continue to think the risks to inflation staying above our 2% target are significant,” she said, noting that there’s a chance that consumer spending or economic growth could be stronger than expected; that financial conditions could become “unnecessarily” easier; and that the level of borrowing costs that neither dampens nor boosts economic growth, the “neutral rate,” could be higher than before the pandemic.
Other upside risks to inflation include geopolitical risks and renewed supply chain problems from a strike by East Coast dockworkers, she said, noting that workers and port operators plan to renegotiate their contracts in January.
Logan did acknowledge the risk that the labor market, while still healthy, could "cool beyond the level needed to get inflation back to 2% on a sustained basis, or the employment situation could even deteriorate abruptly."
Logan also indicated that she "supports" the decision to cut rates, but stopped short of using qualifiers like "strongly" or "fully" as some other Fed policymakers did to express their strong support for a 50 basis point cut.
"Less restrictive policies will help avoid cooling labor markets more than is necessary to return inflation to target in a sustainable and timely manner," Logan said.
Her comments made it clear that she remains concerned that inflationary pressures could rear their ugly head again.
"Downside risks to labor markets have increased, while upside risks to inflation, while muted, remain real," she said. "Any amount of shocks could affect the shape of the normalization path, the pace of policy adjustments, and the level of the ultimate interest rate."
The policy path should not follow a preset course, she said, adding that the Fed "needs to remain flexible and willing to adjust when appropriate."
Fed Minutes: Most Fed policymakers support 50 basis point rate cut in September, but no preset path
Minutes of the Fed's policy meeting released on Wednesday showed that a "supermajority" of policymakers supported the move to start monetary easing last month with a 50 basis point rate cut, but there seemed to be a broader consensus that the first move would not commit the Fed to any particular pace of future rate cuts.
The minutes further reflected the breadth of opinion within the Fed. Policymakers decided to cut rates by 50 basis points, a move the Fed typically takes when it is concerned that the economy is slowing rapidly and needs to be supported by loose financial conditions.
Only Governor Pouman opposed a 50 basis point cut, but the minutes showed that "some" policymakers at the meeting supported a cut of just 25 basis points, while "several others indicated they might support such a decision."
The minutes "reflect a slightly cautious approach to rate cuts," wrote Oliver Allen, senior U.S. economist at Pantheon Macroeconomics, "suggesting that Governor Pouman was not the only one who was uneasy about a 50 basis point cut."
Still, the minutes showed that even some policymakers who might have leaned toward a first 25 basis point cut favored a larger cut to keep pace with the decline in inflation, but not to put future rate cuts "on a default track."
Powell has made clear that he is committed to working to keep unemployment low, and called the rate cut a "powerful" start to easing policy in a press conference after the September meeting.
"Some policymakers" noted that the more important issue was "the overall path of policy normalization rather than the specific size of the first rate cut at this meeting."
Minutes from the September 17-18 meeting showed that policymakers who supported a 50 basis point rate cut "observed that such a recalibration of the monetary policy stance would begin to better align it with recent inflation and labor market indicators." The Fed lowered its policy rate target range to 4.75%-5.00% from 5.25%-5.50% at the meeting, which has been maintained since July 2023.
Other policymakers noted that there was a "reasonable case" for a rate cut at the July meeting, and that data since then have only strengthened the case for easing.
Investors in futures contracts tied to the Fed's policy rate continue to price in a 25 basis point cut at the Fed's next meeting in November.
U.S. inflation has retreated sharply from its 2022 and 2023 highs and, by some measures, is close to the Fed's 2% target even as the economy remains relatively strong.
At the September meeting, policymakers wanted to make sure that point was not lost on them.
"It was important to communicate," the minutes said, that a 50 basis point rate cut "could not be interpreted as evidence of a less optimistic economic outlook."
Still, Fed policymakers are growing concerned about the labor market, noting a recent rise in unemployment and weak employment and inflation data in July and August.
Fed policymakers signaled at the meeting that they are likely to continue cutting rates as long as inflation continues to fall, but the pace and end point of those cuts remain up for debate and will depend on how the economy develops in the coming months.
The latest economic forecasts released after the September meeting showed all but two policymakers expect the Fed to cut rates by at least 75 basis points this year.
Recent data show a rebound in job growth and a decline in unemployment. July employment was revised to 144,000 from 89,000 in the previous month, and some Fed policymakers had said that if they had seen such a weak number at the July meeting, it might have prompted them to cut interest rates at that time.
The dollar rose to a more than two-month high as the market awaited the release of U.S. CPI data
The dollar rose to a two-month high on Wednesday as the market expected that the Federal Reserve would not cut interest rates in November. Traders digested the comments of Fed officials and prepared for the release of the September consumer price index (CPI) on Thursday.
After Friday's strong nonfarm payrolls data led to a repricing of the Fed's near-term rate cut expectations, investors believed the Fed would not continue to ease policy so aggressively, and the minutes of the Federal Open Market Committee (FOMC) were out of date.
"In recent days, the market has been preparing for the minutes and the inflation report. The dollar index has been moving higher, and the turning point is obviously the strong U.S. jobs report," said Amo Sahota, executive director of Klarity FX in San Francisco.
Sahota said it looks like Fed Chairman Powell will have to convince more policymakers at the meeting to support a 25 basis point rate cut than initially expected. "Several other policymakers indicated they would likely support a 25 basis point rate cut," the minutes said.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, continued its gains on Wednesday, hitting its highest level since August 16 at 102.93 before closing up 0.44% at 102.90.
Fed's Daly expects one or two more rate cuts this year
San Francisco Fed President Mary Daly said on Wednesday she "fully" supported the Fed's 50 basis point rate cut last month and said one or two more rate cuts this year would likely be made if the economy develops as she expects.
"The labor market has slowed," Daly told KTVB anchor Carolyn Holly at Boise State University, adding that she is now "pretty confident" that inflation will head toward the Fed's 2% target.
Daly said that with no change in the Fed's policy rate (it has been holding rates in a range of 5.25%-5.50% since July 2023), real interest rates are rising, "which is ultimately what I think is going to cause the economy to collapse ... and there's nothing new going on with inflation."
"I don't want to see the labor market slow down any further," she said.
So The 50 basis point rate cut this month is "to align policy with the economy," she said. "It does not predict what we will do at the next meeting. It does not tell you the speed or size of further adjustments."
"Based on my economic forecast, there may be one or two more rate cuts this year," she said.
Daley said she believes the labor market, with an unemployment rate of 4.1%, is fully employed.
Biden speaks with Netanyahu to discuss Israel's response to Iranian missile attack
U.S. President Biden and Israeli Prime Minister Benjamin Netanyahu spoke on Wednesday about possible retaliatory actions by Israel against Iran. Meanwhile, Lebanon's Hezbollah said its fighters repelled Israeli troops advancing along the border.
Ground conflict is spreading along Lebanon's mountainous southern border with Israel, the Gaza war rages on and the Middle East is on high alert awaiting Israel's response to Iran's missile attack last week.
The White House said Biden and Netanyahu discussed Israel's plans in a 30-minute call.
White House spokesman Jean Pierre told reporters that the discussions were "direct and productive," while acknowledging that the two leaders have differences and are open to them.
Israel's permanent representative to the United Nations, Danon, told reporters that the two leaders had a "positive call and we appreciate the support of the United States."
The White House later said the two leaders agreed to stay in close contact in the coming days, with Biden urging Netanyahu to minimize harm to Lebanese civilians.
The White House said Biden again condemned Iran's attack on Israel, urged a restart of diplomacy on Gaza and affirmed Israel's right to act in self-defense against Hezbollah.
Israel has said arch-rival Iran will pay a price for its missile attacks. Iran has said any retaliation would be devastating, raising concerns about a larger war in the oil-producing region that could lead to U.S. involvement.
The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.
CM Trade
As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.
[Products]
The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.
[System]
2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate
[Service]
Comprehensive market news, professional market analysis, 7*24 hours online customer service
[Advantage]
Low cost, high leverage, flexible one-stop all day two-way trading.
[Authority]
Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.
Follow us to learn more
Free AccessDaily Trading Strategy
Download Now
CM Trade Mobile Application
Economics Calendar
MoreYou May Also Like
