At the beginning of the Asian market on Thursday (November 24), spot gold fluctuated and rose, hitting a three-day high of $1,755.19 an ounce at one point, continuing the overnight rally. On Wednesday, the price of gold bottomed out and rebounded. Although the data on durable goods orders in the United States in October was strong, the price of gold once fell to around $1,728.37 per ounce, but then recovered quickly and closed at $1,749.22 per ounce. On the one hand, data on Wednesday showed that the euro zone, the United Kingdom, U.S. PMI data in November performed relatively poorly, exacerbating concerns about a global economic recession and providing safe-haven support for gold prices. On the other hand, the U.S. dollar fell to a more than one-week low after the minutes of the Federal Reserve meeting indicated that it would slow down the pace of interest rate hikes “soon”, providing momentum for gold prices to rise.
Tai Wong, senior trader at Heraeus Precious Metals, said, “Gold prices rose in relief, the Fed minutes did not show a hawkish surprise, and it is almost confirmed that the rate hike in December will be reduced to 50 basis points. Financial markets are convinced that the Fed is tightening too much, so The reading of the minutes was dovish and there were no real surprises in the minutes given what Fed policymakers have said over the past two weeks.”
Although global central banks tend to raise interest rates further, bulls still have scruples, but at present, the weakening of the US dollar and US bond yields has attracted an influx of gold bargain hunters, and the short-term gold price is biased towards bulls.
This trading day coincides with the U.S. Thanksgiving holiday. The U.S. stock market will be closed, and the gold market will be closed early. It is expected that the overall trading will be restricted, but we still need to pay attention to the further fermentation of the dovish Fed meeting minutes; in addition, we need to pay attention to the geopolitical situation For related news, pay attention to the emergency meeting of European energy ministers.
Fundamentals are mainly bullish
[Fed Minutes: “Overwhelming majority” of policymakers see Fed slowing rate hikes “very soon”]
The latest minutes of the Fed’s meeting showed that at the meeting earlier this month, “a large majority” of policymakers agreed that it “may soon be appropriate” to slow the pace of raising interest rates, and now more and more Fed officials joined the rapid tightening of monetary policy. Debating the implications.
At its Nov. 1-2 meeting, the Fed raised interest rates by 75 basis points for the fourth time in a row. The minutes showed that most policymakers felt they could stop front-end aggressive rate hikes and move toward smaller, more cautious moves as the economy adjusts to higher credit costs and concerns appeared to grow about “excessive” action. hike pace.
“A slower pace of rate increases … would allow the (Federal Open Market) Committee (FOMC) to better assess progress toward its goals of full employment and price stability,” minutes of the meeting released Wednesday said, “one of the reasons Yes, the lag and magnitude of the impact of monetary policy actions on economic activity and inflation are uncertain.”
More important than the size of future rate hikes, the minutes noted, was the start of focusing on how high rates would need to rise to bring inflation down — and the need to carefully estimate that level accurately in the coming months.
“As monetary policy approached a sufficiently restrictive stance, policymakers at the meeting emphasized that the level to which the Committee eventually raised the target range for interest rates … and the evolution of the policy stance thereafter became a more important consideration than the pace of rate hikes,” the minutes said. “
The ultimate landing point for policy will largely depend on the path of inflation in the coming months and whether recent weaker-than-expected inflation data becomes an established downside trend.
Fed economists raised their inflation forecasts for “the next few quarters,” noting that a recession next year was “almost as likely” as the baseline forecast for weak growth.
“The mere fact that they’re going to slow down confirms what most people have been hoping to see,” said Michael James, managing director of equities trading at Wedbush Securities.
[U.S. business activity shrank for five consecutive months in November, new orders hit the lowest in two and a half years]
U.S. business activity shrank for a fifth straight month in November and a sub-measure of new orders fell to its lowest level in 2-1/2 years as rising interest rates slowed demand.
S&P Global said on Wednesday that its flash U.S. composite purchasing managers’ index (PMI), which tracks the manufacturing and services sectors, fell to 46.3 in November from a final 48.2 in October. A reading below 50 indicates a contraction in the private sector. Economic activity is slipping amid the Fed’s most aggressive cycle of rate hikes since the 1980s.
The initial value of the new order sub-index in the comprehensive PMI in November fell to 46.4, the lowest since May 2020,It is also the lowest since 2009, except for the period when the new crown epidemic first started. The final value in October was 49.2.
“Businesses are reporting increasing headwinds from rising costs of living, tightening financial conditions – particularly higher borrowing costs – and weakening demand in both domestic and export markets,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
However, there are some glimmers of hope in the battle against inflation. A measure of business input prices fell to 65.7, the lowest since December 2020, from a final reading of 67.0 in October, the survey showed. This reflects an easing of supply bottlenecks.
the survey suggests,The initial manufacturing PMI fell to 47.6 in November from 50.4 in October, the lowest since May 2020.Economists had forecast 50.
New orders remained subdued, but price pressures continued to subside, with manufacturers reporting improved supplier performance for the first time since October 2019. But faster lead times are often the result of reduced demand for inputs.
Average input prices rose at the slowest pace in two years, but factories continued to face challenges finding skilled labor. This suggests that the moderation in inflation will be gradual and that wage growth will remain high.
The survey showed that the services PMI fell to 46.1 in November from 47.8 in October.Services firms also reported weaker demand and slower growth in input prices.
“The economy is not in recession yet, but we still think economic conditions will worsen in 2023,” said Oren Klachkin, chief U.S. economist at Oxford Economics. Because there is no apparent household or business sector imbalance.”
[U.S. initial jobless claims hit a three-month high last week]
The number of Americans filing new claims for jobless benefits rose to a three-month high last week amid rising tech layoffs.
Initial claims for state unemployment benefits rose by 17,000 to a seasonally adjusted 240,000 for the week ended Nov. 19, the highest level since mid-August.
Unadjusted claims surged 47,909 last week to 248,185. Applications in California rose by 5,024, likely reflecting layoffs in the technology sector. Georgia, Illinois, Minnesota, Iowa, New York, Ohio and Michigan also saw big increases.
Economists urged not to read too much into last week’s increase in jobless claims released by the Labor Department on Wednesday, noting that data tends to be volatile at the start of the holiday season as companies temporarily close or slow hiring. The number of applications remains in line with pre-pandemic levels.
The jobless claims report also showed continuing claims rose by 48,000 to 1.551 million for the week ended Nov. 12
The data is a barometer of hiring. The week of Nov. 12 falls during the period when the government conducts its household survey for the November unemployment rate. Continuing claims rose between the October and November survey periods. Economists, however, forecast the unemployment rate to remain unchanged at 3.7%.
Citigroup economist Isfar Munir said, “It is certainly possible that layoffs have increased the number of applications. Although this can be interpreted as evidence of a weak labor market, we would caution against looking at it that way. Large volatility. Before January, it may be difficult to distinguish seasonal patterns from the impact of layoffs.”
Layoffs have increased in the tech sector, with Twitter, Amazon and Facebook parent Meta announcing tens of thousands of layoffs this month. Companies in rate-sensitive industries such as housing and finance have also been laying off workers.
[The U.S. dollar fell to a new low in more than a week, and U.S. bond yields approached a one-and-a-half-month low]
At the beginning of the Asian market on Thursday, the U.S. dollar index fell slightly, hitting a new low of 105.8 in more than a week, continuing the overnight decline. The U.S. dollar fell across the board on Wednesday after the minutes of the Fed’s November meeting showed that most policymakers agreed that the pace of interest rate hikes should be slowed down soon. In addition, the weaker-than-expected U.S. Markit manufacturing PMI data in November also weighed on the U.S. dollar. On Wednesday, the U.S. dollar index closed down 0.95%, the largest one-day drop since November 14, to close at 106.14
“The Fed has been raising rates faster than at any point in recent history, and now they want more time to judge the impact of their actions,” said Moez Kassam, a portfolio manager at Anson Funds in Toronto.
“It’s the same message in the policy statement, it’s the same message in Powell’s press conference, it’s the same message after that, that’s what they said,” said Thomas Simons, money market economist at Jefferies. Will raise rates at least a little bit more … and terminal rates will be higher than they had been expecting.”
U.S. Treasury yields also fell in shock on Wednesday, with the yield on the 10-year Treasury note falling 6 basis points to 3.696%. The nearly one-and-a-half-month low hit on November 16 was supported at 3.671%. The two-year Treasury yield fell 3 basis points to 4.490%. The U.S. bond market was closed on Thursday for Thanksgiving.
Simons said some of the movement could be due to thin trading the day before the U.S. Thanksgiving holiday. Some investors may also be buying bonds to start month-end rebalancing early.
Thomas Hayes, chairman of Great Hill Capital, said: “The employment data was worse than expected, which makes us believe that the Fed is achieving its goal. More data coming out in the next few weeks may point to a slowdown in the economy, reflecting the lag of the Fed’s monetary tightening measures. effect.”
【Economic activity in the UK in November is still near a 21-month low, and the reduction in orders adds signs of recession】
A survey on Wednesday showed British economic activity remained near a 21-month low in November, with falling orders and slower job growth adding to signs of a recession.
The flash IHS Markit/CIPS composite Purchasing Managers’ Index (PMI) in the UK rose to 48.3 in November from 48.2 in October. The October reading was the lowest since the COVID-19 lockdown in January 2021.
A PMI reading below 50 indicates economic contraction, and economists had expected the flash PMI to fall again to 47.5 this month.
Aside from the pandemic, UK PMIs showed the biggest quarterly decline in economic output since the global financial crisis in early 2009, falling 0.4%, IHS Markit said.
Official data showed that the UK economy shrank by 0.2% in the three months to the end of September, and last week the Office for Budget Responsibility (OBR) said it estimated the UK economy had entered a recession that would last until the end of next year.
Britain’s economy is expected to shrink 0.4% next year, the Organization for Economic Co-operation and Development (OECD) forecast on Tuesday, as the country grapples with rising interest rates, soaring prices and weak confidence. Previously, the OECD expected an increase of 0.2%.
[The decline in business activity in the euro zone eased slightly in November, but demand is still falling]
A survey on Wednesday showed that the decline in euro zone business activity eased slightly in November, but overall demand continued to slide as consumers grappling with a cost-of-living crisis cut back on spending.
There is growing evidence that the euro zone is entering a recession. Economists in a Reuters poll on Tuesday saw a 78 percent chance of a recession in the euro zone within a year, with GDP expected to fall 0.4 percent this quarter and in the first quarter of next year.
The initial value of the S&P Global Eurozone Composite Purchasing Managers Index (PMI) in November was 47.8, slightly higher than October’s 47.3. The consensus was 47.0.
However, the index was below 50, the threshold that separates expansion from contraction, for the fifth straight month in November.
Chris Williamson, chief business economist at S&P Global Market Intelligence (S&P Global Market Intelligence), said: “Business activity fell further in November, raising the possibility of a recession in the euro zone. However, the November PMI data also brought There was some initial good news. In particular, the overall pace of decline in business activity slowed compared to October.”
Activity in the services sector, which dominates the economy, fell again, with the euro zone’s services PMI in November matching a 20-month low of 48.6 hit in October.
Manufacturing activity, hit particularly hard by soaring energy prices and disruptions in supply chains, was also in recession, but to a lesser extent. The flash manufacturing PMI rose to 47.3 in November from 46.4, higher than the survey forecast of 46.0.
[Japan’s manufacturing activity shrank at the fastest rate in two years in November]
A survey on Thursday showed Japanese manufacturing activity shrank at the fastest pace in two years in November as strong inflationary pressures worsened demand.
It was also the first monthly decline in manufacturing activity in 22 months, casting a doubt over the outlook for Japan’s economy, which depends heavily on trade with China and other countries for growth.
The seasonally adjusted Au Jibun Bank Japan Manufacturing Purchasing Managers’ Index (PMI) fell to a preliminary reading of 49.4 in November from a final reading of 50.7 in October.
This is the sharpest contraction in manufacturing activity since the 49.0 reading in November 2020, and it is the first time since January last year that it has fallen below the 50 mark.
“Cooling demand and severe inflationary pressures continue to hold back output and new orders,” said LAura Denman, an analyst at S&P Global Market Intelligence, which compiled the survey. This was seen in the drop in business confidence, which hit its lowest level since May.”
The survey showed output contracted at the fastest pace in 26 months, falling for the fifth straight month.
New export orders and overall new orders also fell sharply. The survey showed that the rate of increase in input prices slowed to a 14-month low, pointing to easing cost pressures, even as input prices continued to grow at a high pace.
In the services sector, data showed activity in the services sector stagnated even as new business inflows rose for a third straight month.
The survey showed that the preliminary seasonally adjusted PMI for services in November was 50.0, down from 53.2 in the previous month.
This makes the composite PMI not immune to the fate of contraction. The Composite PMI fell to 48.9 in November from 51.8 in October, the fastest pace of contraction since February.
[Russia’s intensive missile attack forced Ukraine to close its nuclear power plant, and Kyiv lost power and water]
Russia fired missiles into Ukraine on Wednesday, forcing the shutdown of a nuclear power plant and killing at least six civilians, as Moscow aims to plunge Ukrainian cities into darkness and cold as winter approaches.
The capital region of Kiev, home to more than 3 million people, was completely without power and water, and many other regions also needed emergency power outages to help conserve energy and carry out repairs, the governor of Kiev region said.
Ukrainian President Volodymyr Zelensky called on the United Nations Security Council to take action to stop Russia’s air strikes on critical infrastructure through a video link. He said Ukraine was hit by 70 missiles on Wednesday alone, hitting hospitals, schools, transport infrastructure and residential areas.
Officials in Moldova’s border region said more than half of the country was without power, the first time Ukraine’s neighbors have reported such extensive damage from the war in Ukraine.
Ukraine’s state-run nuclear energy company Energoatom said the outage forced the shutdown of reactors at the Pivdenuklansk nuclear power plant in southern Ukraine and the Rivno and Khmelnytsky nuclear power plants in the west, all in government-controlled areas.
Ukraine’s largest nuclear power plant, in Zaporozhye near the southern front, is controlled by Russia and has been previously shut down by shelling.
As the first snow of Ukraine’s winter falls, authorities fear power outages will affect millions.
Zelensky announced on Tuesday that special “invincibility centers” will be set up across Ukraine, providing free electricity, heating, water, internet, mobile phone connections and medicines throughout the day
The fundamentals are mainly negative
[U.S. durable goods orders hit a four-month high in October]
A report from the U.S. Department of Commerce showed that orders for durable goods in the U.S. rose 1% month-on-month in October, a new high since June, and also stronger than market expectations of 0.4%. Orders for nondefense durable goods excluding aircraft, a closely watched measure of business spending plans, rose 0.7 percent in October. Orders for the so-called core durable goods fell 0.8% in September.
Shipments of core durable goods jumped 1.3 percent after falling 0.1 percent in September, which, along with strong retail sales data for October, suggested that the economy is still expanding, although the risk of a recession next year is growing as the Fed’s rate hikes increase. Information is believed to be killing demand.
There has been some rare good news in a housing market battered by soaring mortgage rates. New home sales, which account for about 10 percent of U.S. home sales, rebounded 7.5 percent in October to a seasonally adjusted annual rate of 632,000 units, the Commerce Department’s fourth report showed.
[European Central Bank Vice President: Despite the risk of recession in the euro area, the European Central Bank will continue to raise interest rates]
The European Central Bank will keep raising interest rates until it brings inflation down to its medium-term target of around 2 percent, even as the euro zone economy is headed toward recession, ECB Vice President De Guindos said on Wednesday.
De Guindos did not elaborate on the extent of a possible rate hike at the December meeting, but said it would depend on upcoming ECB expectations and November inflation data.
“I can tell you that our approach will be consistent and we will continue to raise rates to ensure that inflation moves closer to what we define as price stability,” de Guindos said at a financial event in Madrid.
The European Central Bank has raised interest rates in the past three consecutive meetings, raising the deposit rate from minus 0.5% to 1.5%.
Inflation will remain at its current level of around 10 percent in the coming months, De Guindos said, adding that the persistence of inflationary pressures should not be underestimated. “It is important to watch the evolution of underlying inflation and possible second-round effects as they will determine the monetary policy response,” De Guindos said.
De Guindos noted that he expects price increases to moderate in the first quarter or first half of next year, but even in an environment of high inflation averaging 6% or 7%, “we also see core inflation at elevated levels in the coming months.” .
[BoE Chief Economist Peel said that further interest rate hikes may be needed to ensure a sustainable return of inflation to the 2% target]
Echoing previous statements by the central bank, the Bank of England’s chief economist Peel said on Wednesday that further rate hikes may be needed to bring inflation back to the central bank’s 2% target on a sustainable basis.
In a speech later on Wednesday, Peel said: “Given the greater persistent risks to inflation posed by the need to contain potential second-round effects, further action may be required to ensure a sustainable return to 2 percent over the medium term. Target.”
Peel said he did not envisage raising interest rates to the level that financial markets were pricing in ahead of the BoE’s Nov. 3 policy decision – with bank rates peaking at around 5.25 percent in the second half of next year.
[The New Zealand Federal Reserve Chairman said that further interest rate hikes are needed to control spiraling inflation]
Reserve Bank of New Zealand Governor Orr said on Thursday that the benchmark interest rate needs to rise and New Zealand needs to enter a recession to control spiraling inflation, which will weigh on some homeowners.
Orr told a parliamentary committee, “We regret that New Zealanders are suffering a major shock and that inflation is above target. As we have said before, inflation is not good for everyone and has a cost to the economy.”
The Reserve Bank of New Zealand raised interest rates by 75 basis points on Wednesday, the largest rate increase in history, and warned that the economy may have to spend a full year in recession to control persistently high inflation.
“Inflation pain is the main problem, and that’s what we’re trying to address,” Orr said.
The RBNZ surprised markets with its hawkish tone and peak rate forecasts. The central bank now expects interest rates to peak at 5.5 percent, compared with an earlier forecast of 4.1 percent.
“The thing that has surprised us most since August is the continuation of global inflation … Domestically, we’re seeing price pressures everywhere, and the central banker board realizes that more and faster action is needed to break this down,” Orr said. Spiral.”
On the whole, the Fed’s dovish meeting minutes have significantly suppressed the US dollar, which is expected to provide further momentum for gold prices, and the gold price has held the support near the September 12 high of 1735.02 for three consecutive trading days, completing the confirmation of the back step after the breakthrough , the gold price outlook tends to continue the upward trend since the beginning of the month. In the short term, focus on the resistance near the November 18 high of 1767.58 and the recent high on November 15 near the resistance of 1786.36; below, continue to focus on the support near 1735.
At 10:18 Beijing time, spot gold was at $1,754.58 an ounce.