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Spot gold fell, the US index hit a 21 year high, and Biden pointed out the "important task" for the Fed

发布时间：2022-08-25 浏览：116

On Thursday (May 12), spot gold fell again. Although high inflation has brought benefits to the gold price, the market is worried that the aggressive water collection policy that the Federal Reserve may adopt to curb inflation will damage the economy. US President Biden also reiterated that controlling inflation is the top priority, which makes investors prefer to hold dollars. The US index hit a new high of 104.73 since mid December 2002.

At 20:06 Beijing time, spot gold fell 0.61% to US $1840.98 per ounce; COMEX gold futures contract fell 0.71% to $1840.8 / ounce; The dollar index rose 0.64% to 104.657.

Inflation is expected to run high for a long time

The upward pressure on prices in the United States in April eased compared with March, but the year-on-year increase of 8.3% is still more than three times the 2% target set by the Federal Reserve, and may operate at a high level for a long time. Investors are worried that the continued tightening of the Federal Reserve policy may slow down economic growth, so they tend to hold dollars.

St. Lewis Fed chairman Brad said on Wednesday (May 11) that U.S. inflation is still "overheating", but the Fed's current plan (the next two meetings raise interest rates by 50 basis points each) is good, and the Fed has no plan to directly raise interest rates by 75 basis points in a single meeting.

Previously, Brad has been the most outspoken advocate of accelerating the pace of interest rate hike by the decision-making level of the Federal Reserve. However, his latest remarks show that the decision-making level of the Federal Reserve supports the plan put forward by Chairman Powell last week, that is, to raise interest rates by 50 basis points at each of the next two meetings, and the Federal Reserve needs to make more inventory of the inflation outlook and its impact on the economy.

The Federal Reserve raised interest rates by 50 basis points last week, the largest single rate increase in nearly 22 years. At the same time, it is tightening the ultra loose monetary policy implemented during the pandemic. However, Fed policymakers do not want to weaken the labor market and avoid a long-term downturn.

Christopher rupkey, chief economist of fwdbonds in New York, said: "the country's fight against high inflation is not over, but the market can still breathe a sigh of relief because it has not become worse. The Federal Reserve can raise interest rates by 50 basis points in June and July as planned, and there is no reason to take more rapid action to combat inflation."

The Federal Reserve will continue to be data only

But Brad also said that the real economy may suffer twists and turns, and how the Fed will act in the future still depends on the performance of the newly released economic data.

"I think it depends more on the country... We hope that with each policy meeting, inflation will ease significantly,... But we don't want to promise what we will do in December today."

The purpose of the rise in borrowing costs is to slow down household demand for goods and services and business demand for workers quickly enough to cool price and wage pressures and reduce inflation to the 2% target set by the Federal Reserve.

Veronica Clark, an economist at Citigroup in New York, said: "as service prices continue to rise further, it may become increasingly difficult for the Federal Reserve to deny that wage price spirals are taking place, and recognizing this means that the market must face the risk of further hawkish fed policies."

Ing economists said that there is no sign that the Federal Reserve will become more relaxed in this round of tightening cycle. The Federal Reserve has more reason than most other central banks to reduce its policy interest rate to neutral, which should be the core narrative of supporting the dollar in the coming months.

Biden reiterated "priority"

On Wednesday (May 11), US President Biden once again admitted that inflation was "unacceptably high" and was causing pain to American families, and reiterated that reducing prices "is the government's top economic priority".

Biden said, "although it is exciting to see inflation slowing down in April, the fact is that inflation is still unacceptably high. Although I will never interfere with the independence of the Federal Reserve, I believe we have established a strong economy and labor market. President Powell said last week that inflation is the first threat, and I believe the Federal Reserve will keep this in mind. In addition to the Federal Reserve (tightening monetary policy) , the government plans to focus on reducing household spending costs and reducing the federal deficit. "

Biden also blamed the Russian Ukrainian war for the surge in global inflation. However, before the war broke out on February 24, inflation had become a stubborn disease of the global economy, because the U.S. government injected a huge amount of relief funds into the economy during the pandemic, which may now intensify and prolong the inflation struggle of the Federal Reserve.

As a large number of workers leave the job market, as the economy recovers, the bottleneck of the supply chain becomes more and more obvious. The demand for services such as air travel and hotel accommodation in summer and labor shortages may continue to increase inflation.

Matt Simpson, senior market analyst at city index, said in a report that although inflation expectations are high and there are new capital inflows into the gold market, it is unknown whether the gold price has formed an important support around $1830.

Spot gold down $1818

On the hourly chart, the gold price started a downward III wave from US $1910, and the lower support looked towards the 61.8% target of US $1818. On the daily line, wave III is the sub wave of the downward (c) wave since the 1998 US dollar. (c) The wave is the sub wave of the downward ((II)) wave starting from US $2070, and the lower support looks towards the 100% target of US $1817.