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On May 7th, Chicago Federal Reserve President John Goolsby warned against instinctively lowering interest rates due to faster productivity growth, as this phenomenon can sometimes push up inflation. In prepared remarks delivered before a panel discussion at the Milken Institute Global Conference on Wednesday, Goolsby stated that the Feds response to faster productivity growth "depends largely on whether productivity growth is unexpected or anticipated." He explained that in the first case, inflation might be contained, allowing for lower interest rates. In the latter case, the additional investment and spending resulting from productivity growth could push up inflation, necessitating higher interest rates. Furthermore, he emphasized the need to be wary of consumption and investment driven by expectations of future growth. "The more hype there is, the greater the need to raise rates to prevent overheating," he said.Federal Reserves Goolsby: If artificial intelligence is as good as advertised, that would be "wonderful," but the Fed still needs to be wary of an overheated economy.Federal Reserves Goolsby: If people withdraw expected future earnings in advance for todays consumption, it could lead to an overheated economy.The Federal Reserve accepted a total of $1.633 billion from seven counterparties in its fixed-rate reverse repurchase operations.On May 7th, it was reported that on May 6th local time, Mohsen Rezaei, military advisor to Irans Supreme Leader, stated in an interview that Iran will not allow the United States to extricate itself from the crisis without paying a price. Rezaei stated that the United States is currently attempting to make a "show" by raising the issue of reopening the Strait of Hormuz and then withdraw from the region, but Iran will not allow this. He emphasized that the United States must compensate Iran for the losses incurred, and Iran "will certainly obtain its rights and reparations."

International gold prices break away from a week and a half high, investors wait for heavy data to be released

Oct 26, 2021 10:58

On Tuesday (October 5), international gold prices fell and left the high of $1,770.44 per ounce set overnight since September 23, as the U.S. dollar benefited from sluggish risk sentiment. Prior to the release of employment data in the United States this Friday, gold prices are expected to fluctuate, as the data may influence the Fed's debt purchase reduction plan.

At GMT+8 16:14, spot gold fell 0.60% to US$1759.06 per ounce; the main COMEX gold contract fell 0.46% to US$1759.4 per ounce; the US dollar index rose by 0.12% to 93.920.


The rise in the dollar index has made gold more expensive for buyers who hold other currencies. But the stock market slid as investors worried that soaring energy prices would inhibit economic growth. In addition, the US debt ceiling deadlock has also limited the downside of gold prices.

OANDA Asia Pacific senior market analyst Jeffrey Halley said that the downturn in the stock market prompted Asian investors to buy US dollars, putting pressure on gold. He added that before the US employment report is released, the price of gold will be in the range of $1750-1785.00.

U.S. President Biden said on Monday (October 4) that unless Republicans and Democrats work together to vote to increase the debt ceiling in the next two weeks, the federal government may exceed the $28.4 trillion debt ceiling and default on an unprecedented level. .

Halley said: "Gold may find support when it drops to $1750.00 this week because of inflation and US fiscal concerns." Halley added that although these uncertainties will support gold to a certain extent, U.S. monetary policy Direction will be the ultimate key factor.

It is expected that the number of non-agricultural employment in the United States in September will show continued improvement in the labor market, which may cause the Fed to begin to reduce stimulus measures before the end of the year. Reduced stimulus measures and increased interest rates have increased bond yields, putting pressure on gold because the opportunity cost of holding non-yielding gold bars will increase.

However, some market participants said that the US's reduction of debt purchase issues may have limited impact on gold because investors have already digested this expectation. Now the main force determining the direction of gold prices has turned to the magnitude and pace of the Fed's rate hike.

St. Louis Fed President Brad said on Monday that for the first time in years, American companies have encountered no problems in raising prices to customers. While the market is worried that expectations of high inflation have become entrenched, he warned that inflation may remain high for some time to come.

Brad is one of the strongest supporters in the Federal Reserve that believe that positive measures should be taken to curb higher-than-expected inflation. He believes that two interest rate hikes are needed in 2022. At present, interest rates are still at a level close to zero, which has been at this level since the outbreak of the new crown pandemic in early 2020.

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