ETF positions continue to brush six years high! Analysts predict that the European Central Bank will launch QE in September! Focus on US GDP during the day
On Thursday (August 29), spot gold rose slightly after a narrow range of shocks, and is now reported at $1,542.26, an increase of 0.21%.
Although the energy stocks soared on Wednesday due to the sharp drop in US crude oil inventories, the price of gold once fell back to nearly $10. However, due to international trade tensions and concerns about the global economic slowdown, analysts believe that the rebound in the stock market is temporary, especially in the case of further intensification of US bond yields, so it is still optimistic about the future gold trend.
At the same time, the domestic dissatisfaction with Trump's economic policies has risen, and the global central bank's easing expectations have continued to heat up, so it still pushes a large number of safe-haven funds into the gold ETF, and the total number of positions continues to rise to a six-year high, the largest of which is gold. Gold ETF SPDR positions also rose to a three-year high.
During the day, we paid attention to the US GDP data. Earlier, the Fed officials’ speech was still broadly divided. The market will look for clues about employment and inflation from the recent US economic data.
The US economic recession has intensified
Since the US 2-year bond yield and 10-year bond yield curve are upside down to the most serious level since 2007, in the view of fixed-income market traders, the 10-year bond yield is lower than the 2-year bond yield, meaning The emergence of bondholders with higher short-term gains is a rare indicator of economic recession. Concerns about the advent of the recession have intensified, which has caused gold to hit the first line of $1546.94.
To this question, the yield curve upside down is a recession signal, which increases the capital inflow of safe-haven gold. ”
“If the US economy really starts to slow down and the dollar continues to strengthen, this means unsustainable fundamental dislocations and will attract the attention of policy makers. If the US can let other economies notice this concern together, it may Get some support to coordinate interventions."
The rise in energy stocks led to a rebound in the US stock market, but it was just a dead cat jump
US stocks opened lower on Wednesday, as the closing Dow rose more than 200 points, the S&P 500 index rose more than 0.6%, and the Nasdaq rose more than 0.4%, as energy stocks and banking stocks led the US stocks to rebound. Affected by this, gold has seen a near-$10 correction from the $1546.94 line.
The US Energy Information Administration reported on Wednesday that US crude oil inventories fell by 10 million barrels in the week ended Aug. 23, the largest weekly decline after a 10.8 million barrel decrease in the week of July 19. Therefore, the energy sector rebounded.
But analysts pointed out that the performance of US stocks in 2019 was the worst among the 11 constituents of the S&P 500. It was the worst performer since US President Trump's 2016 election. It is also the US bull market since more than a decade ago. The worst performance since the beginning.
Therefore, the market is skeptical about the effectiveness of the US stock market rebound, because in the current international trade tensions and the global economic slowdown, the market's decline in energy demand is difficult to sustain the US energy stocks. This has already reacted in US stock index futures.
In this regard, the ratio between gold and the S&P 500 is testing a key fulcrum, and a higher break may trigger a 25% rebound in gold prices. It is estimated that the price of gold will be pushed to close to $2,000 per ounce.
Think: "The stock market continues to look vulnerable, especially considering the deeper reversal of the US yield curve."
Another report said that the "Dow Jones Index" Google search volume soared, the average American public is paying attention to the stock market - this may not be a good sign for the economy.
In the report, the search for the keyword "Dow Jones Index" has risen sharply in recent days. Currently, the search volume of this keyword is 28% higher than the recent peak in May. When the stock market fluctuates, ordinary Americans often use Google to search for the Dow Jones Index. We have to wait to see how the stock market will perform for the rest of 2019, but one thing is certain: Americans are watching anxiously. . ”
Fed officials’ speech is still very different, and the market is concerned about the evening US GDP data.
A number of Fed officials spoke on Wednesday.
Dallas Fed President Kaplan and San Francisco Fed President Daley’s comments further strengthened last week’s Fed Chairman Powell’s mention of possible interest rate cuts in September. Daley said he supported the Fed’s decision to cut interest rates in July and considered it a policy adjustment. She also expressed her concern about the lack of inflationary pressure.
Kaplan believes that we may need to adjust the policy," he said. Although consumer spending is "strong", the central bank still needs to be "forward-looking" in setting interest rates.
However, Richmond Fed President Balkin said on Thursday that he has not yet decided whether to support another rate cut in September, but the economy seems to be performing well. Barkin believes that American consumers seem to be very strong, but business confidence seems to have weakened.
After the speeches of several Fed officials, the market’s expectation of a rate cut in September has hardly changed. It is still considered that the probability of a 25 basis point rate cut in September is close to 100%.
Overall, the Fed still has significant differences in interest rate cuts, so the market is waiting for more economic data, which serves as a basis for observing the direction of the Fed's monetary policy. The day's attention to US GDP data, if the data is not good, may further strengthen the market's interest rate cut expectations.
European gold market prices are also continuing to rise
On the UK side, Prime Minister Johnson is working on a trip to Europe on October 31. Johnson arranged for the Queen to speak at the resumption of the parliament on October 14. The move limits the time for opposition lawmakers to take action to prevent unofficial Brexit.
Although it was British historical practice to allow the parliament to temporarily adjourn before the Queen’s speech, the decision to limit parliamentary oversight in the weeks before Brexit, the UK’s most controversial policy decision in decades, immediately sparked a strong protest. Earlier, the British opposition party leaders reached an agreement to use the parliamentary procedure to force Johnson to ask Brussels to postpone the Brexit date until October 31.
Therefore, the British Labor Party may try to pull down Johnson. British Labor Party leader Kirbin said that when the time is ripe, he will launch a vote of no confidence. This means that if you want to avoid time, those who oppose no agreement to leave the EU may have to take action next week. This undoubtedly exacerbates the uncertainty of British politics.
Affected by this, the sterling-denominated gold has further risen, further approaching the historical highs created in mid-August.
In Europe, the price of gold in euros rose faster, hitting a record high of more than 1,396 euros, as the market's loose expectations for the European Central Bank remained high, thus making gold continue to go higher. However, due to news that the Five Star Movement Party and the opposition Democratic Party are preparing to set aside many years of differences to form a coalition government, paving the way for the timely introduction of the 2020 draft budget, which has eased the market's worries and caused the gold to fall back slightly.
Global central bank easing expectations continue to strengthen, Societe Generale predicts that the European Central Bank will launch quantitative easing in September
As the global central bank's loose expectations are becoming more apparent, the market is paying attention to the trend of the European Central Bank, as the market generally expects the European Central Bank to cut interest rates by 20 basis points in September, which may be the latest sign of the strengthening of global easing.
In response, Societe Generale predicts that the European Central Bank will launch an “open”, quantitative purchase easing program in the form of asset purchases next month to boost the sluggish economy and stimulate inflation in the euro zone.
The Societe Generale economist said in a report that after the policy meeting on September 12th, the European Central Bank will announce a monthly purchase of assets worth 40 billion euros ($44 billion), which will cut the deposit rate by 20 basis points. Introducing a “generous” rating system to prevent banks from passing negative interest rates to individual customers.
Societe General predicts that as the United States will fall into recession next year, quantitative easing is unlikely to end before March 2021.
“The market is expected to remain high, there is no shift in data flow, and there are significant risks in the future. The ECB has few options besides decisive action,” writes Annenkov. “It’s usually preferable to take a lot of policy actions in the early stages, but this time it’s hard to exceed expectations.”
A recent series of frustrating economic news, including the impending recession in Germany, has prompted investors to expect the European Central Bank to launch a massive stimulus package. Finnish central bank governor, European Central Bank Governing Council member Olli Rehn said that policy makers should raise measures beyond market expectations this month.
The financial APP suggests that if the ECB does introduce further easing measures, it may strengthen the global central bank's loose expectations. Since the beginning of the year, interest rate cuts have become the monetary policy tone of major central banks in more than 20 countries, and the world is welcoming a new round of interest rate cuts.
Earlier, Swiss National Bank Governor Mesler said that as global uncertainty worsened, the Swiss National Bank had to maintain monetary policy easing to withstand the demand for safe-haven Swiss francs. The Swiss National Bank is one of the few central banks in the world to implement negative interest rates. The market has compared the country’s 10-year bond yields to German 10-year bond yields and predicts that 10-year German bond yields may fall to -1. %.
Polls believe that Trump’s economic policy has more harm than good for the first time.
A new Quinnipiac poll shows that 37% of respondents in the US believe that the economy is declining. Respondents who indicated an improvement in the economy accounted for 31%. Only 30% believe that the economy is basically flat, the lowest level ever recorded.
Polls have always shown that the economy is Trump's strongest selling point, but Quinnipiac's latest result may be a turning point. Not only did the public decline in optimism, they also blamed Trang: Twenty-year-old Americans who considered his policy to do more harm than good for the first time accounted for the majority, 41% versus 37%.
“Confidence in the economy is declining,” said. “About a quarter of voters criticize the president’s policy, saying they hurt the economy, the highest level since Trump took office.”
The decline in economic expectations may also affect the perception of the current state of the economy: 61% of respondents said the economic situation is good or good, down from the high water level of 71% in May. 37% said the economy was bad or not very good.
Gold ETF positions continue to brush six years high
Gold ETFs data on August 29 showed that global gold ETF holdings closed at a six-year high.
The largest gold gold holdings were 882.41 tons, an increase of 9.09 tons from the previous trading day, a new high of nearly three years.
In this regard, the price of gold is rising sharply from the current level, and the momentum of gold ETF capital inflows provides support; if you remember that the last time there was a large amount of speculative funds entering the market in 2011, the inflow of speculative funds in just 9 months Pushing oil prices up by $500. I can easily see similar things happen again.
She pointed out that due to a series of macroeconomic factors such as trade, Brexit, Syria and Iran, the flow of gold into the gold etf in July 2019 was the largest, with a net inflow of 2.6 billion US dollars; she meant to put this figure into the actual situation. Look, this is a pretty big number. Think about it, so far this year's gold-backed etf has more than $5 billion in inflows, of which $3.5 billion has flowed into the largest ETF-SPDR in gold.
Future market outlook
1 14:45 France's second quarter GDP annual rate
2 15:55 German unemployed and unemployment rate in August
3 17:00 Eurozone August Economic and Industrial Prosperity Index, Eurozone August Consumer Confidence Index
4 20:00 Germany August CPI annual rate
5 20:30 US real-time quarterly rate of real GDP in the second quarter, annualized quarterly rate of core PCE price index in the second quarter of the United States, and number of jobless claims in the US until August 24
6 22:00 US July home sales contract sales index monthly rate