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On April 26, according to the Wall Street Journal, in order to simplify the negotiations on reciprocal tariffs, US negotiating officials plan to use a new framework developed by the Office of the United States Trade Representative (USTR), which lists major categories of negotiations, such as tariffs and quotas, non-tariff trade barriers, digital trade, product origin principles, economic security and other commercial issues. In these categories, US officials will put forward specific requirements for individual countries, but people familiar with the matter emphasized that this document may also be adjusted at any time. People familiar with the matter said that the United States initial plan is to negotiate with 18 major trading partners in turn over the next two months. The initial plan is to alternately participate in the talks with six countries per week for three weeks (six countries in the first week, another six countries in the second week, and another six countries in the third week) until the deadline of July 8. If US President Trump does not extend the 90-day suspension period he set by then, those countries that cannot reach an agreement will begin to face reciprocal tariffs.On April 26, after the United States announced additional tariffs on goods from many countries, Peruvian business people expressed concerns that the US governments extreme measures would disrupt the global trade order and may even trigger a global economic recession. Alvaro Barrenechea Chavez, vice president of the Peruvian-Chinese Chamber of Commerce, said that the negative impact of the US tariff policy has begun to emerge and hoped that the US government would rethink. Recognizing the importance of countries working together to promote development, I think this is the best way to become a true "world citizen."Market news: Musks xAI company plans to raise about US$20 billion in a financing round.Conflict situation: 1. Ukrainian top commander: Russia tried to use air strikes as a cover to increase ground attacks, but was repelled by Ukraine. 2. Ukrainian Air Force: Russia launched more than 103 drones in the night attack on Ukraine. 3. Local officials said Ukraine launched an attack in the Belgorod region of Russia, killing two people. 4. The local governor said that Russia launched an attack on the Dnipropetrovsk region of Ukraine, killing one person and injuring eight people. Peace talks: 1. Trump: ① The situation between Russia and Ukraine is gradually becoming clear, and they are "very close" to reaching an agreement. ② Ukraine is unlikely to join NATO. ③ Ukraine has not yet signed the rare earth agreement and hopes that the agreement can be signed immediately. ④ It is foreseeable that the United States will conduct commercial cooperation with Ukraine and Russia after reaching an agreement. 2. Russian Foreign Minister: Russia is "ready to reach an agreement on Ukraine." 3. Russian Presidential Assistant Ushakov: Russia and the United States will continue to maintain active dialogue. 4. Russian Presidential Assistant: Putin discussed the possibility of resuming direct negotiations between Russia and Ukraine with the US envoy. 5. The differences between the United States, Europe and Ukraine are clear. The documents show that European countries and Ukraine have raised objections to some of the US proposals to end the Russia-Ukraine conflict. 6. Market news: As part of the peace agreement, the United States asked Russian President Putin to abandon the demilitarization requirement. Other situations: 1. President of Hungarys OTP Bank: We hope to return to all business areas in Russia after the (Russia-Ukraine) conflict ends. 2. Ukrainian President Zelensky: US ground forces are not necessary for Ukraine. 3. Trump said Crimea will remain in Russia, Zelensky: Never recognize it. Agreeing with Trumps view, Crimea cannot be recovered by force. 4. NATO Secretary-General Rutte met with Trump and senior US officials to discuss defense spending, NATO summit, and the Ukrainian conflict.Rising global trade risks, overall policy uncertainty and the sustainability of U.S. debt top the list of potential risks to the U.S. financial system, according to the Federal Reserves latest financial stability report released on Friday. This is the first time the Fed has conducted a semi-annual survey on financial risks since Trump returned to the White House. 73% of respondents said that global trade risks are their biggest concern, more than double the proportion reported in November. Half of the respondents believe that overall policy uncertainty is the most worrying issue, an increase from the same period last year. The survey also found that issues related to recent market turmoil have received more attention, with 27% of respondents worried about the functioning of the U.S. Treasury market, up from 17% last fall. Foreign withdrawals from U.S. assets and the value of the dollar have also risen on the list of concerns.

Gold encounters "total oppression", analysts look at $1,500

Oct 26, 2021 11:02

The senior precious metals strategist Georgette Boele of ABN AMRO stated in a report: "So far this year, the price of gold has fallen by 7.5%. The outlook for the price of gold remains negative. We maintain our year-end forecast at US$1,700 per ounce by the end of 2022. The forecast is $1,500 per ounce."



The three factors are working together, and the price of gold has been in a downward trend for a long time.


Since June, the price of gold has been in a downward trend. The strengthening of the U.S. dollar and rising U.S. Treasury yields have put pressure on gold prices. In addition, the market has begun to digest expectations that the Fed will raise interest rates faster, as inflation concerns have put pressure on gold prices.

Many analysts attribute the recent fall in gold prices to three main factors: the strengthening of the U.S. dollar and the reduction in the size of bond purchases by the Federal Reserve. The third catalyst is the rise in the yield of 10-year US Treasury bonds. The US 10-year Treasury bond was closed on Monday for a holiday, but yields have been rising recently. The rise in yields is a direct result of market sentiment that the Fed has begun to reduce the scale of asset purchases this year

Boele said: “ Investors have adjusted their expectations of the Fed. They expect the Fed to raise interest rates faster than they had previously expected. In addition, the 2-year U.S. Treasury yield and 2-year real yield have also risen. This reflects this. In addition, the U.S. dollar has appreciated by 5% this year. When the U.S. dollar appreciates, the price of gold tends to weaken."

Many central banks are expected to tighten policies, and gold prospects are worrisome


On the other hand, due to the tightening of global monetary policy and the strengthening of the US dollar, the Dutch central bank is still not optimistic about gold for the rest of this year and next year.

Some central banks have already started actions, such as the central banks of Norway, New Zealand, Brazil, and South Korea. We expect the Fed to start raising interest rates in early 2023, and the Bank of England and the Bank of Canada may raise interest rates before then. Compared with other central banks, the European Central Bank, the Bank of Japan, the Reserve Bank of Australia, the Riksbank and the Swiss National Bank may adjust their monetary policy later, but the direction is to tighten, not relax. Tightening monetary policy is usually bad for gold because it will trigger a rise in government bond yields.

Boele said: " We expect the U.S. dollar to rise further. The gains may be moderate, but a higher U.S. dollar is usually detrimental to the price of gold. "

Diversion of other assets, gold's attractiveness is further frustrated


It is worth noting that the employment report just released last week was far below economists' expectations. This figure is lower than the disappointing August, which showed an increase of approximately 243,000 jobs. The number of jobs in September was about 194,000, which is expected to be between 450,000 and 500,000. Nevertheless, despite the extremely mild economic recovery and few new jobs, the price of gold continues to fall.

Analysts believe that one possible reason for the continued decline in gold is the incredible recognition of the cryptocurrency Bitcoin. Bitcoin futures continue to rise sharply, today they have risen by US$2705, an increase of 4.90%, and the current value of a bitcoin is US$57,885. Bitcoin has been in a rebound mode, which is negatively correlated with lower gold prices. At the beginning of 2021, the trading price of gold futures was approximately US$1,920 per ounce, and the price of Bitcoin was US$40,000. By early March of this year, the price of gold hit a double bottom of about $1,680. The transaction price of Bitcoin is much higher than $50,000.

In addition to the impact of U.S. Treasury yields and the U.S. dollar, as well as the pressure from the central bank's tightening of monetary policy, investors may need to comprehensively consider the attractiveness of stocks and cryptocurrencies for speculative funds to fully understand the overall picture of the downturn in the gold market. On Tuesday (approximately October 12th) in Asian markets in early trading, spot gold prices continued to decline slightly and are currently approaching $1,750 per ounce.


(Spot gold daily chart)

GMT+8 At 09:11 on October 12, spot gold was quoted at $1754.71 per ounce.

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