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Date
2024-06-22
Gold Prices: Just a Top-Level Fluctuation, No Panic
On Thursday, the US Dollar Index experienced a pullback, falling to the vicinity of the 104 mark, and ultimately closed down by 0.38% at 104.02. US Treasury yields also retreated, with the benchmark 10-year US Treasury yield closing at 4.2170%; the two-year US Treasury yield, which is more sensitive to monetary policy, closed at 4.0920%. US stocks saw the Dow Jones Industrial Average close down by 0.33%, the S&P 500 Index up by 0.21%, and the Nasdaq Composite up by 0.76%. Tesla (TSLA.O) surged by 21.9%, marking its best single-day gain since May 2013, with its market value increasing by approximately $150 billion.
Risk Alerts for Friday:
- 4:00 PM, Germany will release the October IFO Business Climate Index;
- 8:30 PM, Canada will announce the August retail sales monthly rate, in addition, the US will also release the September durable goods orders monthly rate;
- 10:00 PM, the US will announce the final value of the University of Michigan Consumer Sentiment Index for October and the final value of the one-year inflation rate expectation for October;
- 11:00 PM, Boston Fed President Collins will participate in a fireside chat;
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- 1:00 AM the next day, the US will announce the total number of oil rigs for the week ending October 25.
Geopolitical tensions have provided significant support for gold prices. US Secretary of State Blinken stated on Thursday that the US does not want Israel to engage in a protracted military operation in Lebanon. At this time, all parties are working on new negotiations for a ceasefire in Gaza and a hostage agreement. Against the backdrop of Israel's military strikes on Iran-backed Hezbollah in Lebanon, this tension has increased the market's demand for safe-haven assets, driving up gold prices.
As the conflict between Israel and Hamas continues, market attention to the situation in the Middle East intensifies, and this uncertainty prompts investors to turn to safe-haven assets such as gold. The rise in geopolitical risks typically leads to increased demand for gold, as investors seek to protect their assets from potential market volatility and economic instability.
Recent economic data has shown some divergence. Data released on Thursday showed that the number of initial US jobless claims unexpectedly declined last week, but the number of continued jobless claims in mid-October rose to a nearly three-year high, indicating that the unemployed are finding it increasingly difficult to find new jobs. The release of this data has sparked market concerns about the health of the US economy, further driving the safe-haven demand for gold.Additionally, new home sales in the United States increased by 4.1% month-on-month in September, with an annual rate of 738,000 units, marking the highest level in nearly a year and a half. This data indicates that despite overall economic challenges, the real estate market remains robust. Concurrently, there has been an increase in U.S. business activity in October, with some alleviation of price pressures, all of which provide support for the Federal Reserve's monetary policy.
Cleveland Federal Reserve President Hamak stated that although inflationary pressures have eased, they have not yet returned to the desired levels. This suggests that the Federal Reserve will maintain a cautious stance in future monetary policies and may continue to implement rate cuts. Such changes in expectations can also affect the appeal of gold, as rate cuts typically reduce the opportunity cost of holding gold.
According to the CME "FedWatch," the probability of the Federal Reserve cutting rates by 25 basis points in November is 96.3%, while the probability of keeping the current rates unchanged is 3.7%. These changes in expectations have a direct impact on the gold market. If the Federal Reserve chooses to cut rates, it usually leads to a devaluation of the U.S. dollar, thereby enhancing the appeal of gold. Moreover, as the market's expectations for the Federal Reserve's monetary policy continue to evolve, gold's position as a store of value will become more prominent. The market's attention to the future direction of the Federal Reserve's policies will continue to influence investors' demand for gold.
Gold prices rose nearly 1% on Thursday, then, as expected, faced pressure in the 4-hour resistance area and began to decline. Today, investors are watching the strength of the gold decline, with attention to the 4-hour support area. After stabilizing in the 4-hour support area, consider participating in gold long positions. At the same time, investors need to closely monitor changes in the Middle East situation, as the market's demand for safe-haven assets may further increase.
The impact of recent geopolitical situations on the crude oil market cannot be ignored. On October 1st, Iran fired missiles at Israel, triggering market concerns that Israel might attack Iran's oil infrastructure, causing Brent crude oil prices to soar by about 8% in early October. However, with reports indicating that Israel will not take military action against Iran's energy infrastructure, concerns about supply disruptions have eased, and Brent crude oil prices fell by about 8% in mid-October.
The Middle East risk premium is expanding and contracting almost daily, and the energy market continues to fluctuate. This volatility requires investors to be more cautious when trading, as market sentiment can change rapidly in the short term.
In addition to geopolitical factors, the health of the global economy directly affects crude oil demand. A survey released on Thursday showed that in Europe, despite businesses hardly raising prices, both domestic and foreign demand have declined, and business activity in the eurozone has stagnated again this month, remaining in the contraction range. This phenomenon reflects weak economic growth, which may lead to further weakening of demand for crude oil.
In the United Kingdom, the latest survey results show that business optimism has declined, and Finance Minister Rachel Reeves faces the challenge of balancing tax increases and promoting growth in the first budget of the new government. These factors could lead to further declines in crude oil demand, thereby exerting pressure on oil prices.
On the supply side, Iran, as a member of the Organization of the Petroleum Exporting Countries (OPEC), has a daily production of about 4 million barrels in 2023. According to a report by the U.S. government, Iran's oil exports are expected to reach about 1.5 million barrels per day in 2024, up from 1.4 million barrels per day in 2023. This increase may have a certain impact on the global crude oil market, especially against the backdrop of the current tense situation in the Middle East.Additionally, although market concerns over Middle Eastern conflicts may lead to short-term price fluctuations, the overall stability of supply remains a significant factor affecting crude oil prices. If Iran can maintain its export levels, it may alleviate market concerns about supply disruptions to some extent.
On Thursday (October 24th), reports indicated that the United States and Israel would attempt to resume negotiations regarding a ceasefire in Gaza, causing international crude oil futures prices to decline amidst volatility. Today, attention should be paid to the 4-hour support area for crude oil, and after a stable pullback, consider going long on crude oil. Investors also need to continue monitoring geopolitical risks, sluggish global economic growth, and changes in supply prospects, all of which will have a profound impact on crude oil prices.