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On May 13, the research report pointed out that at the multi-department press conference held by the State Council Information Office on May 7, 2025, the "double reduction" was implemented beyond expectations, reflecting the care of the market by the moderately loose monetary policy. Looking back at the two "double reductions" since 2020, the issuance of local government bonds has ushered in a significant increase in volume after the "double reductions". The liquidity released in advance by the "double reductions" has also smoothed the impact of the subsequent increase in local government bond supply to a certain extent. As for this year, the issuance of new local government bonds is still relatively slow, and there is still a large amount to be released in the future. Referring to the past experience of issuing local government bonds after the "double reductions", we expect that the issuance scale of new special bonds in the second and third quarters is expected to exceed one trillion yuan, and the annual issuance quota can be basically completed before the third quarter.Japans 5-year government bond yield rose 9 basis points to 1%.Summary of Bank of Japan meeting opinions: One member said that if the global supply chain is disrupted, it is necessary to be vigilant about the risk of price increases. One member said that in the long run, the US tariff policy and the resulting uncertainty may not affect Japans potential inflation rate and potential growth rate.Summary of opinions from the Bank of Japan meeting: One member said that the direction of U.S. trade policy could turn positive or negative at any time, which also means that the Bank of Japans policy path could change at any time.Summary of opinions from the Bank of Japan meeting: One member said that the Bank of Japan will temporarily suspend interest rate hikes, but should not fall into excessive pessimism and must guide monetary policy flexibly and skillfully; one member said that there is little possibility of a slowdown in Japans underlying inflation.

Forecast for the price of gold: Pre-NFP trade slowdown around $1,790 according to XAU/USD

Alina Haynes

Aug 05, 2022 15:08

 截屏2022-08-04 下午5.25.46_1024x576.png

 

As traders exhibit the normal concern ahead of the important US employment data on Friday, the price of gold (XAU/USD) seesaws near the monthly peak. Despite this, the price of yellow metal fluctuates between $1,788 and $1,791 as of the morning of the press in Europe.

 

The market's conflicting fears about the global recession and the most recent geopolitical stories affecting Taiwan, in addition to the pre-NFP caution, further contribute to the XAU/USD's movement. It's important to note that the options market sends conflicting signals and presents difficulties for gold purchasers.

 

The recent increase in US Treasury rates has helped to strengthen the US currency and put downward pressure on the price of gold, but it also seems to have lessened concerns about a global economic downturn.

 

The US Dollar Index (DXY) reverses a two-day slump and registers modest gains at 106.00. The dollar index declined during the previous two days before consolidating recent losses by monitoring the yields. It's important to note that after falling during the previous two days, the US 10-year Treasury rates have stabilized at roughly 2.069 percent. The disparity between the coupons for 10-year and 2-year bonds is still the largest it has been since 2000, yet US Treasury rates have continued to show the possibility of a recession.

 

Geopolitical issues from the Taiwan Strait are also a problem for gold purchasers elsewhere, as China expresses its displeasure with Nancy Pelosi, the speaker of the US House of Representatives, visiting Taipei. According to West Official, US Secretary of State Antony Blinken recently stated at an East Asia meeting that China's response to US House Speaker Nancy Pelosi's visit to Taiwan had been "flagrantly aggressive."

 

In terms of the options market's attitude, a one-month risk reversal (RR) of gold prices ends a three-week downturn when seen weekly, but if observed daily, it causes a third straight day of decline. It should be mentioned that the risk reversal term refers to the spread between bullish and bearish bets, namely the call options and put options (RR).

 

In conclusion, gold prices are still stable, but the bad news outweighs the good news, therefore today's US employment data for July will be important for the short-term outlook. The US dollar's recovery may continue and impact on gold prices if the employment numbers look to be higher than expected.


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