Gold Trading Alert: Gold prices oscillate at high levels

Early Monday (12 August) Asian market, spot gold narrowly oscillated, currently trading in the vicinity of 2430 U.S. dollars/ounce. Gold prices rose sharply last Thursday after holding steady on Friday, closing at $2430.92 per ounce, investors on the Federal Reserve will cut interest rates in September confidence, U.S. bond yields fell on Friday, to provide some support for the gold price, and the market will also focus on the U.S. CPI data will come out this week.

In addition, the geopolitical situation in the Middle East is still tense, but also the price of gold provides safe-haven support. Iran's acting foreign minister said on Sunday (11 August) “will take legitimate and decisive action against Israel”.

However, gold prices fell 0.6% last week. Gold prices plunged 3 percent last Monday after investors closed positions and a broad sell-off in the stock market.

Zain Vawda, market analyst at OANDA, said: “In the medium term, the outlook for gold remains positive, and any decline is likely to be short-lived given the underlying macroeconomic factors. the US jobless claims data on August 8 such as eased recessionary concerns and boosted gold prices. In addition, statements by Fed policymakers this week have supported the view that a rate cut may be imminent.”

The dollar index fell 0.1 percent on Friday, having gold more attractive to investors holding other currencies. 10-year US Treasury yields also fell. Markets fluctuated sharply last week due to worries about the U.S. economic outlook, with investors turning their attention to key inflation data on 14 August for fresh clues about the potential magnitude of a September rate cut.

Markets expect US CPI to grow at an annual rate of 2.9 percent in July, slightly lower than the previous month's 3.0 percent. However, the month-on-month rate is expected to accelerate to 0.2% from -0.1%. Core CPI is forecast to grow at a lower rate of 3.2% year-on-year from 3.3%, but the month-on-month rate will rise to 0.2% from 0.1%.

Fed policymakers are increasingly confident that inflation is cooling enough to permit a rate cut. They will take clues about the magnitude and timing of rate cuts from economic data rather than stock market turmoil.

“The main theme in the bond market at the beginning of the month concerned labor market conditions and the Fed's future path,” said Lou Brien, market strategist at DRW Trading in Chicago, and then “there was a lot more noise added to the market due to the yen carry trades”

Such trades involve borrowing yen at low cost to fund purchases of U.S. assets, including technology stocks. However, the yen's sharp rise against the dollar prompted traders to close those positions.

The yield on the interest-rate-sensitive two-year Treasury note rose 1.1 basis points to 4.055 percent last week, after rising 18 basis points last week, the biggest one-week gain since March.

The yield on the 10-year Treasury note fell 5.3 basis points to 3.944 percent on Friday, after rising 15 basis points last week, the biggest one-week gain since April.

The Federal Reserve is expected to cut interest rates at its next policy meeting on 17-18 September, but traders are wrestling with whether a 25 basis point or 50 basis point cut is more likely.

Stephen Gola, head of U.S. Treasury sales and trading at StoneX Group, said the market may be overestimating the likelihood of a 50 basis point rate cut.

“The Fed has been very cautious and slow to move, trying to stick to its policy tenets of monetary policy with a long and variable lag,” he said, “and move quickly when needed, but otherwise we do live in a world where 25 basis point increments are not crashing.”

According to the CME FedWatch Tool, traders now see a 48.5 percent probability of a 50 basis point rate cut and a 51.5 percent probability of a 25 basis point cut. At one point last Monday, the market fully digested that the Fed would cut rates by 50 basis points, and traders began to speculate that the Fed could make an emergency rate cut by September.

However, Fed policymakers said last Thursday that they are increasingly confident that inflation has cooled enough to allow a rate cut, and that they will take clues about the size and timing of the cut from economic data rather than from stock market turmoil.

Zachary Griffiths, senior investment grade strategist at CreditSights, says: “If anything happens with the US CPI data, I would fear that it would be the headline data that surprises, but our underlying expectation is that inflation is falling. The economy is slowing as consumer momentum is running out, excess savings are running out, and we are starting to see unemployment rise, which should impact spending and inflation data.”

Assuming inflation doesn't unexpectedly move upward, employment data, particularly the unemployment rate, will likely remain a key focus for traders.

“Concerns about the state of the labor market and the pace of Fed action remain and will come to the fore more clearly in the coming weeks,” said DRW's Brien.“ Many components of the labor market have been weakening for quite some time and will continue to do so.”

Fed Chairman Jerome Powell's remarks at the Jackson Hole Economic Policy Symposium on 22-24 August could also provide new clues to the path of rate cuts.

Markets endured a chaotic week last week, due in large part to a plunge in global equities as a result of unexpectedly weak U.S. jobs data in early August, while demand for safe assets such as the yen and Swiss franc sent those currencies soaring to their highest since the start of the year on Monday.

Investors also need to pay close attention to news related to the geopolitical situation in the Middle East.

Lebanese Hezbollah forces said on the 8th, the use of rockets, heavy artillery shells, and other attacks on the Israeli “Iron Dome” system launching platform, etc. The Israeli army said that the Lebanese direction of the source of artillery fire. The Israeli army said in the Lebanese direction of the rocket launching source shelling. 8 to the early hours of the 9th, the Israeli army also on the southern part of the Hezbollah armed personnel, military buildings to carry out airstrikes.

Lebanese Hezbollah forces issued a statement late on the night of the 9th local time that the armed forces launched a total of nine operations against Israeli targets on that day. The statement said that the armed forces on that day many times the command of the Israeli army's 769th Brigade located in Shemona in northern Israel, firing rockets, and the use of a large number of drones to attack the command of the Israeli army's Coastal Battalion in Liman in northwestern Israel. The IDF issued a news release on the evening of 9 September stating that on that day the Israeli army had struck a Lebanese Hezbollah armed launching device in Hammam, southern Lebanon, which was loaded with rockets that were ready to be fired. In addition, the Israeli army carried out air strikes and shelling of Lebanese Hizbullah armed installations in several places in southern Lebanon.

On 10 August local time, air defense sirens were sounded in various locations in northern Israel. The Israel Defense Forces confirmed that more than 10 rockets had been fired from southern Lebanon into northern Israel that evening, all of which landed in open areas and caused no injuries. The Israeli army then shelled the area in Lebanon from which the rockets were fired.

According to U.S. media local Time 9 reports, several informed officials said that due to the continued escalation of tensions between Israel and Iran, the United States will allocate 3.5 billion U.S. dollars to Israel for the purchase of U.S.-made weapons and military equipment.

According to the U.S. Wall Street Journal reported on the 9th local time, citing U.S. officials, the United States has warned Iran that if Iran launches a large-scale attack on Israel, the Iranian government and the economy may suffer a devastating blow. The official said the United States has sent a clear message to Iran that if they launch a major retaliatory attack on Israel, the risk of escalation will be very high. If Iran launches a major attack against Israel, the stability of the Iranian economy and government would be at serious risk. The U.S. has conveyed this warning to Iran, either directly or through intermediaries, without providing specific details. At present, the Iranian side has no response to this for the time being.

On the 10th of local time, the comprehensive official Palestinian news agency Wafa (WAFA) and Al Jazeera reported that the Israeli army bombed a school in the Gaza Strip, killing more than 100 Palestinians and injuring dozens of others. The school is known to shelter displaced people.

Iran's acting foreign minister said on Sunday (11 August) that “legitimate and decisive actions will be taken against Israel”.

According to two sources cited by AXIOS, the latest assessment of the Israeli intelligence community is that Iran has decided to attack Israel directly in retaliation for the assassination of Hamas political leader Haniya. and could launch an attack within days, or even act before the 15 August hostage negotiations in Gaza.

In addition, Hamas said in a statement that the Hamas side has expressed its position to the mediators, including Egypt, Qatar, and the United States, requesting that the parties concerned put forward a negotiation plan for the exchange of detainees and a ceasefire agreement based on the agreement reached on 2 July this year and the relevant Security Council resolutions, rather than restarting new negotiations. At the same time, the statement stressed that the Hamas side has provided “all the necessary flexibility and positivity” for the conduct of negotiations.

This trading day will come out of the United States in July, the New York Fed 1-year inflation expectations, investors need to pay attention to, in addition to the former U.S. President Donald Trump received Tesla president in Musk's heavyweight interview. Investors also need to pay attention to it.