Gold market analysis: the Federal Reserve's debt reduction expectation temperature will not decrease, gold continues to be under pressure and shocks

The U.S. dollar rose on October 11, soaring energy prices and falling U.S. stocks prompted investors to seek safe-haven assets, and funds tended toward the U.S. dollar. Spot gold continued the trend of rising and falling last Friday, and continued to decline slightly throughout the day.



In the overnight market, the US dollar index rose, and most non-US currencies fell. The US dollar index rose 0.28% to 94.3669. U.S. Treasury yields fell across the board, with 10-year U.S. Treasury yields falling 4.82 basis points to 1.570%. The market is paying more attention to whether the Fed will reduce the scale of bond purchases in November. At present, the non-agricultural employment data is disappointing, but the Fed has not been affected. The market expects to reduce the scale of debt purchases in November is still strong. On the other hand, soaring energy prices intensified inflationary pressures, and the U.S. dollar attracted a large amount of capital inflows, which further increased expectations for tightening monetary policy this year. Recent data has made people worry that the US economy will take longer than expected to recover the remaining 5 million jobs lost due to the new crown epidemic, and factors such as high inflation and the continued existence of the new crown epidemic will weaken growth. But San Francisco Fed President Daley said on Sunday (October 10) that she did not believe that the epidemic would lead to an economic recession, and that it was too early to say that the economy "stalled". Daly said that I have always believed that Delta will cause losses, and that it has already caused losses, but it has not derailed us and will not plunge us into another economic recession. With the development of the new crown epidemic, the economy is also developing. "European Central Bank President Lagarde told the German media recently that the European Central Bank is paying close attention to wage dynamics and ensuring that inflation expectations are anchored at 2%. Damage the economic recovery and employment in the Eurozone. "Compared with the Fed, the European Central Bank’s demand for inflation has changed from "fear" to "unwanted". Lagarde also emphasized that "should not overreact" at this time, indicating that it pays more attention to achieving the 2% target in the medium term. Supply shocks will also be more calm. Therefore, even if inflation is high, the European Central Bank will tolerate inflation higher than 2% for a longer period of time than the Fed. The Fed seems to be preparing to reduce stimulus measures. The United States’ inflation-adjusted "real" yield is negative. But it is still better than Europe. Given that the European Central Bank is not in a hurry to tighten policy, this gap may widen, so the relative economic advantage supports the US dollar. In addition, December 3 is the delayed debt ceiling deadline, although it is unlikely, but If there is a default, it will undoubtedly be catastrophic to the economic outlook. By then, the US dollar is expected to gain new favor, and gold is likely to usher in a new round of decline.

Looking at the daily line: the daily moving average crosses down, and the overall state is still bearish. Although it rose after the non-agricultural period on Friday, it was also blocked near the 40-day line at 1780, indicating that the current market is very unstable in terms of sentiment. At present, gold is fluctuating up and down in the short-term moving average belt of 1760. The short-term market may repeatedly compete up and down. At the beginning of this week, it is expected that the market will have a high probability of digesting the "roller coaster" market of last Friday, and there will be a high probability that it will continue. After a short rebound and reconfirming the pressure, the market returned to weak and volatile.

Bank of China Guangdong Branch Wang Gang

Original title: 20211012—The Fed's expected debt reduction temperature remains unchanged, and gold continues to be under pressure and shocks

Source: Bank of China official website