2024-02-15 23:48:00
Gold trading reminder: U.S. retail sales hit the biggest drop in 10 months, gold price regains 2,000 mark
During the Asian session on Friday (February 16), spot gold fluctuated within a narrow range and was currently trading around $2,003.87 per ounce. Gold prices rose 0.6% on Thursday to close at $2,004.18 per ounce. The previously weak U.S. retail sales in January hit the largest drop in 10 months, pushing the U.S. dollar and government bond yields lower, providing gold prices with an opportunity to rebound. In addition, gold prices 100-day moving average on Wednesday After the loss is recovered, it attracts bargain hunters to enter the market.
Tai Wong, an independent metal analyst in New York, said, “Gold bulls seized the opportunity of unexpectedly weak retail sales data to drive gold prices back above $2,000.”
U.S. retail sales fell more than expected in January. A separate report from the Labor Department showed that initial jobless claims fell by 8,000 last week to a seasonally adjusted 212,000. After the data was released, the U.S. dollar index extended losses and the benchmark 10-year government bond yield fell, making non-yielding gold more attractive to overseas buyers.
Chris Gaffney, president of global markets at EverBank, said the main driver of gold in the short term is interest rate expectations – there is still a risk that gold will be under pressure in the short term before the Fed actually says it is time to cut interest rates.
Gold prices fell 1.4% on Tuesday following data showed an unexpected rise in U.S. consumer prices. Traders were betting following the inflation data that Fed policymakers might wait until June before cutting interest rates.
The latest data from CME’s “Fed Watch” shows that the probability of the Fed keeping interest rates unchanged in the range of 5.25%-5.50% in March is 89.5%, and the probability of cutting interest rates by 25 basis points is 10.5%. The probability of keeping interest rates unchanged by May is 63.3%, the probability of a cumulative 25 basis point interest rate cut is 33.7%, and the probability of a cumulative 50 basis point interest rate cut is 3.1%.
Market focus is also on speeches from Federal Reserve officials for clues on the timetable for rate cuts
Federal Reserve Vice Chairman for Financial Supervision Michael Barr said on Wednesday that higher-than-expected inflation in January showed that the road back to 2% inflation in the United States “might be bumpy,” adding that it was time to assert that it would be possible without a serious hit to employment or economic growth. It is too early to restore price stability.
Economists at Mitsubishi UFJ Financial Group (MUFG) noted that higher interest rates are generally negative for precious metals. They said, “Silver and the platinum group metals (platinum and palladium) have moved lower along with gold but will still rebound in the barge chase. Higher interest rates are generally negative for precious metals because they do not bear interest. Due to 2024 Gold prices are likely to fall further in the short term as hopes of a rate cut in the first half fade, but a significant rate cut is likely later this year, so the weakness in gold prices should be temporary.”
They noted, “While rising U.S. inflation dampened expectations for a rate cut by the Federal Reserve, gold’s resilience remains intact. Gold prices are still consolidating as higher-than-expected U.S. inflation dampened hopes of a rate cut in the first half of 2024. In addition to sticky inflation data , rising yields have also received further support following the recent FOMC meeting – the cancellation of tightening policy Fed Chairman Powell hinted that a rate cut in March ‘may not be the most likely scenario’. While higher long-term interest rates are negative for non-interest-bearing gold, we Convinced that two other channels critical to our bullish 2024 view on gold remain intact, namely strong buying by emerging market central banks in reserve diversification and its role as a geopolitical hedge of last resort. With gold prices currently hovering Near the $2,000 mark, we acknowledge downside risks to our constructive $2,350 year-end forecast. However, we still recommend going long gold and view any sell-off as an environment with elevated risk dimensions (geopolitics, recessionary repricing) buying opportunity, which plays into gold’s favorable hedging qualities.”
The focus now is Friday’s producer price index. At least three more Fed officials are scheduled to speak later this week.
Friday focuses on financial data and events (Beijing time)
①08:00 Fed Bostic delivers a speech
②15:00 UK retail sales monthly rate following seasonally adjustment in January
③15:45 France January CPI monthly rate
④21:00 Federal Reserve Barkin delivers a speech
⑤21:30 Canadian December wholesale sales monthly rate, US January PPI annual rate and monthly rate, US January total new housing starts annualized, US January total building permits
⑥22:10 Federal Reserve Board Governor Barr delivers a speech
⑦23:00 US February one-year inflation rate expectation, US February University of Michigan consumer confidence index initial value
⑧The next day at 01:10, Fed Chairman Daley delivered a speech
⑨The next day at 02:00, the total number of oil drilling rigs in the United States for the week to February 16
At 07:47 Beijing time, spot gold was trading at $2,003.83 per ounce.
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