Gold trading reminder: Fed officials said that the reduction plan has not changed, and the downward pressure on gold prices is not small! Follow US CPI

On Wednesday (October 13) Asian time, spot gold price held steady at around 1760. On Tuesday (October 12), the price of gold rose slightly. Job vacancies in the United States declined in August, and the collective decline in U.S. stocks supported gold prices. However, the U.S. dollar hit the highest in a year and limited the increase in gold prices. Federal Reserve officials reduced debt purchases in November. The affirmation also makes the market outlook for the rise of gold prices not optimistic.

The focus will be on the US September CPI data during the day. In addition, the Federal Reserve will also announce the minutes of the monetary policy meeting, which is expected to further strengthen the forecast of November reduction, which is negative for gold prices.

Fundamentals are bullish

[IMF slightly lowers its global growth forecast for 2021]

The International Monetary Fund (IMF) on Tuesday lowered the growth prospects of the United States and other major industrialized countries, and said that continued supply chain disruptions and price pressures hindered the recovery of the global economy from the new crown epidemic.

The IMF's "World Economic Outlook" lowered the global growth rate forecast for 2021 from 6.0% in July to 5.9%, and maintained the growth rate forecast for 2022 at 4.9%.

The U.S. bears the brunt of these effects. The IMF lowered its 2021 U.S. economic growth forecast by one percentage point from the July estimate of 7.0% to 6.0%-the July forecast growth rate is regarded as the highest since 1984. Strong speed.
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The IMF said that US economic growth may shrink further because its forecast assumes that the US Congress will approve President Biden’s 10-year US$4 trillion infrastructure and social expenditure plan. Lawmakers are now trying to reach a consensus on a smaller plan, and the IMF said that a significant reduction in the size of the plan would weaken the growth prospects of the United States and its trading partners.

[Job vacancies decreased by 659,000 in August]

The number of voluntary resignations in the United States surged to a record high in August, while the number of recruits fell the most in eight months, highlighting the difficulties companies face as they try to fill millions of job vacancies.

The monthly job vacancies and turnover survey report (JOLTS) released by the US Department of Labor on Tuesday showed that on the last day of August, the number of job vacancies measuring labor demand fell by 659,000 to 10.4 million . This is another reflection of the American economy's struggle with shortages. The shortage is pushing up inflation and restraining growth. Data released last Friday showed that the number of new jobs created in September in the United States was the lowest in nine months.

The number of resignations in August increased by approximately 242,000, bringing the total to 4.3 million, a record high. The resignation rate rose from 2.7% in July to 2.9% in August, a record high.

Recruitment decreased by 439,000 to 6.3 million. The recruitment rate dropped from 4.6% in July to 4.3%.

[Yellen insists that the rise in US inflation is "temporary"]

U.S. Treasury Secretary Janet Yellen insisted on her estimate that the increase in the U.S. inflation rate will prove to be "temporary," while she acknowledged that the rate of price increases will take longer to return to normal.

In an interview with Norah O'Donnell on the CBS Evening News broadcast on Tuesday night, Yellen said: "I think this is temporary, but I am not saying that these pressures will disappear in a month or two."

Yellen attributed the increase in prices of many commodities to the “huge damage” caused by the new crown epidemic to the global supply chain, and this effect will slowly disappear.

"Consumers have no reason to panic about the lack of goods they want to buy during Christmas," she added.

[The three major stock indexes all closed down, and market sentiment was cautious before the release of the earnings season and the Federal Reserve meeting minutes]

The US stock market closed lower on Tuesday and continued its decline in late trading. Investors became more nervous before the third quarter earnings report, but Tesla's jump helped support the market.

The Dow fell 0.34%, the S&P 500 fell 0.24%, and the Nasdaq fell 0.14%.

(Dow daily chart)

What makes investors more cautious is that the Federal Reserve will release the minutes of its last policy meeting on Wednesday, and market participants will carefully look for clues as to when related banks may begin to reduce their large-scale bond purchase plans.

Michael James, managing director of stock trading at WedBush Securities, said, "The main point of the institutional portfolio manager is - let's look at the performance of the financial report and how large the negative impact of shortages, rising interest rates and supply chain bottlenecks are. Many of these factors All are reflected in the current stock price level."

Fundamentals are bad

[Brad: The Fed should prepare for the possibility of raising interest rates next spring]

US Federal Reserve Bank of St. Louis President Brad said on Tuesday that he supports the Fed starting to reduce the pace of asset purchases next month and end the plan next spring to raise interest rates if necessary to keep inflation down.

Brad said in an interview: “The argument that inflation naturally subsides is reasonable, but I only want to give this scenario a 50% possibility.” He added that he hopes to maintain high or further inflation for the next few months. Be prepared for the possibility of going higher. "I just want to be prepared in case we have to act in advance so that we can take action next spring or summer as a last resort."

[Fed policymakers say the reduction plan has not changed]

Two Fed policymakers said on Tuesday that the plan to reduce the pace of bond purchases has not changed , which strengthens the Fed’s expectation that it will begin to withdraw its crisis-period stimulus measures as early as next month.

"I personally think that in terms of price stabilization tasks, the goal of'further substantive progress' has long been reached, and in terms of employment tasks, it has almost reached the target." In his prepared speech, he stated that he reiterated that the Fed agreed at the last meeting that “there may be a reason soon” to start a reduction action.

Clarida’s optimistic assessment may be consistent with Chairman Powell’s views, who previously stated that he only needs to see a “good” September employment report to be ready to start reducing debt purchases in November.

Earlier on Tuesday, Atlanta Fed President Bostic said that last month’s employment report showed sufficient progress and supported the beginning of November to reduce debt purchases. "From November, I will feel very relieved," he said in an interview with the Financial Times. "I think progress has been made. The sooner we act, the better."

The Fed's next policy meeting is scheduled for November 2-3.

[September consumer short-term and medium-term inflation expectations hit the highest since 2013]

A survey released by the New York Fed on Tuesday showed that US consumers again raised short- and medium-term inflation expectations in September, but lowered their views on how much house prices, fuel prices and other expenditures will rise in the coming year.

The median expected inflation for the next year rose to 5.3%, the highest level since the survey was launched in 2013, and it has climbed for the 11th consecutive month . The median three-year inflation expectation rose to 4.2%, a record high, from 4.0% in August.

The latest report measuring consumer expectations comes as Federal Reserve (Fed/FED) officials are trying to figure out whether the rise in inflation caused by the epidemic will be more sustained or will subside on its own. If it is the former, a policy response may be required.

White House spokesman Psaki said on Tuesday that the US government is focusing on preventing inflation from becoming an issue in the future.

[U.S. Treasury yields climbed to boost the U.S. dollar to its highest in a year]

The U.S. dollar hit a one-year high on Tuesday. The market expects that the Fed will announce a reduction in large-scale bond purchases next month. At the same time, concerns about soaring energy prices have prompted investors to turn to the safe-haven U.S. dollar.

(Daily chart of the US dollar index)

The yield on US two-year Treasuries jumped to the highest in more than 18 months. Investors dumped US Treasuries, believing that soaring energy prices would intensify inflation and increase the pressure on the Fed to act earlier than expected.

FXStreet.com senior analyst Joseph Trevisani said that the current focus is on U.S. bond yields. I think the credit market expects that the Fed will begin to reduce asset purchases in November.

According to a monthly market confidence survey conducted by Deutsche Bank in October, the vast majority of respondents expect U.S. bond yields to rise from current levels.

In general, the gold price may be out of the shock range with the help of the September CPI data in the United States. Prior to this, the volatility is expected to be limited, and there is still not much reason for optimism in the gold price market outlook.

(Spot gold daily chart)

GMT+8 8:47, spot gold was quoted at US$1,760.47 per ounce.