Gold trading reminder: The number of initial requests continues to rise + the stock market plummets, has the price of gold risen strongly?

On Friday (October 1) Asian session, spot gold fell slightly, trading around 1752. The price of gold rose sharply on Thursday (September 30), mainly due to the three consecutive weeks of rising data in the initial request and the fall of the high dollar. In addition, the stock market also retreated sharply. However, the Fed's expectations of reducing bond purchases during the year still limited the rise in gold prices.

Pay attention to the US August PCE price index, August personal expenditure monthly rate and September ISM manufacturing PMI. The core PCE price index that the Fed cares about is expected to fall slightly, personal spending is expected to increase month-on-month in August, and the ISM manufacturing PMI may also decline.

Fundamentals are bullish

[The number of first-time jobless claims in the United States has unexpectedly increased for three consecutive weeks]

Last week, the number of first-time jobless claims in the United States unexpectedly rose for the third consecutive week, which may reflect the deterioration of labor market conditions and the high volatility of this weekly data.

According to data released by the US Department of Labor on Thursday , as of the week of September 25, the number of people applying for unemployment benefits for the first time increased to 362,000 . Among the states, the number of applications in California has surged again. The median forecast of the economists surveyed was that the number fell to 330,000.

As of the week of September 18, the number of people who continued to apply for unemployment benefits dropped to 2.8 million.

The rise in the number of first-time jobless claims may highlight the fluctuations in the weekly data, as employers are eager to hire more employees and be able to retain existing staff. However, the number of people applying for unemployment benefits for the first time is still hovering near the low point since the epidemic.

The last time the data rose for three consecutive weeks was in April 2020, but the increase at that time was significantly greater.

[Significantly lower, the S&P 500 Index recorded its worst monthly and quarterly performance since the outbreak]

The US stock market fell sharply on Thursday, and the S&P 500 index set its worst monthly performance since the outbreak of the global public health crisis. In September and the third quarter, the stock market was turbulent due to concerns about the new crown epidemic and inflation, as well as Washington's constant budget quarrels.

The S&P 500 Index fell 1.19%, the Dow fell 1.59%, and the Nasdaq fell 0.44%.

(S&P 500 daily chart)

In late trading, the U.S. Senate and House of Representatives passed a temporary spending bill to keep the government running, but after a brief rise, the stock market resumed its downward trend, and even dragged down the Nasdaq index, which went up most of the day. .

Baird investment strategy analyst Ross Mayfield said that the market has always been resilient, but as the end of the quarter, policy news about the debt ceiling and the chaos caused by these spending proposals put pressure on the market.

In a larger context, the trend is quite moderate. We have just experienced a seven-month rise. Despite the news risk, as well as the factors of the epidemic and the reduction of debt purchases, the volatility has been quite low.

Mayfield added that the market has to be suspended, which is necessary and probably expected.

[Poor unemployment data drags down the dollar from a one-year high, and the market consolidates its recent gains]

The U.S. dollar fell from a one-year high in volatile trading on Thursday, due to the increase in the number of initial jobless claims in the United States last week, and investors consolidated their gains after rising sharply in the past few trading days.

(Daily chart of U.S. dollar index)

The U.S. dollar as a whole is supported by the sharp rise in U.S. Treasury yields, and the market expects that the Fed will start to scale back its monetary stimulus plan from November, despite the slowdown in global economic growth.

However, Thursday’s economic data partially weakened the dollar’s strength.

As of the week of September 25, the number of initial applications increased to 362,000, which has increased for the third consecutive week. The economists interviewed previously predicted that the number of initial claims for unemployment benefits last week was expected to be 335,000.

Another report released by the US Department of Commerce on Thursday showed that the US second-quarter gross domestic product (GDP) increased by 6.7% year-on-year, compared with the previous value reported in August of 6.6%. The government's pandemic aid funds boosted consumer spending, which in turn boosted economic growth.

Capital Investment Macroeconomics Assistant Economist Joseph Marlow wrote in a research report, "Even if the U.S. dollar falls further in the short term, we expect it to regain its recent gains in due course."

"Although the long-term bond yields of most major economies have risen, U.S. bond yields have risen more than most public bonds, and importantly, their rise is largely driven by the rise in real yields, which reflects the Expectations of tightening monetary policy."

Fundamentals are bad

[Chicago Federal Reserve President is expected to start the code reduction from the end of this year]

Chicago Fed Chairman Evans said, "There are good reasons to believe that the explosive rise in relative prices will be reflected in a wide range of inflation indicators, but inflation data will decline in the future."

"We have seen a lot of supply shortages and bottlenecks. In many cases, the supply chain is actually fragmented. And I have to admit that this is something I didn't expect."

"The data we are looking at indicate that inflation expectations will continue to be at 2% or below. I do worry that they will be slightly below that level."

" My assumption is that by the end of this year, the stimulus policy will be gradually reduced. It is also possible in January next year. The asset purchase plan will end in the middle or autumn of next year. "

[The President of the Atlanta Fed expects to raise interest rates for the first time in the second half of next year]

Atlanta Fed President Bostic said that the Fed has made "substantial further progress" in both its employment and inflation missions.

" My prediction model is that the economy will be very strong by the end of 2022 and will be close to full employment by the end of 2022. "

" For 2023, I think there will be one more rate hike than previously predicted, and it is expected that there will be three rate hikes ."

"If the economy does grow strongly as expected, there is no problem in raising interest rates."

Long-term inflation expectations "begin to rise to the higher part of the historical range, but in my opinion they are not out of control."

[The Fed's overnight reverse repurchase tool reached US$1.6 trillion on the last day of the quarter]

On the last trading day of the third quarter, the amount of funds deposited by investors in a major instrument of the Federal Reserve reached a new high.

On Thursday, 92 participants invested a total of $1.605 trillion in the Fed's overnight reverse repurchase facility (RRP). Counterparties such as money market funds can use this tool to deposit cash to the central bank. The previous record high was $1.416 trillion set the day before. The new amount on Thursday was the largest one-day increase since mid-June.

The use of this tool has skyrocketed because investors need a place to store their short-term cash, and the US Treasury bill market has become imbalanced-largely driven by the reduction in US government cash balances and the Federal Reserve’s asset purchases. Concerns about the possible impact of a default on the debt ceiling have also boosted demand, and there is also an end-of-season effect in the currency market.

TD strategist Gennadiy Goldberg said: "Even if the usage continues to rise, this should be the high level of RRP in the short term. If the debt ceiling is suspended before mid-October, it should push up the supply of Treasury bills and may help reduce the use of RRP. quantity."

In general, the price of gold rose sharply on Thursday, breaking through the resistance of the 23.6% retracement level, and the short-term downtrend was eased, and there is a chance to challenge the upward downward trend line again in the day .

(Spot gold daily chart)

GMT+8 8:53, spot gold was quoted at $1752.46 per ounce.