Gold's recent buying momentum has rebounded sharply, and it has recorded a two-week rebound. Even the CFTC, which had flowed out sharply before, has turned into a net inflow. On Monday (July 24), at the beginning of the Asian session, gold immediately strengthened and reached a two-month high of 1257. It can be said that this week started well. Here, we must remind investors that gold bulls must solve these problems if they want to win more wins this week.
★★★Question 1: Will the Fed’s July resolution reveal concerns about raising interest rates and shrinking?
Beijing time on Thursday (July 27) at 2 am will announce the Fed's July interest rate resolution, the resolution market generally believes that the soldiers do not move. There is no press conference in this resolution, so the degree of importance may be weakened. The key lies in whether the Fed expressed concern about the downturn in inflation in the resolution statement. Whether the recent weak economic data is considered temporary or worried, these may indicate whether the Fed can raise interest rates and shrink the table in the second half of the year. It is worth noting that the Federal Reserve Chairman Yellen’s grandmother is a big dove in this month’s congressional testimony. More importantly, Yellen said at the time that if core inflation continued to fall below the target of 2%, and did not rule out the possibility of re-adjusting monetary policy, the Fed pays close attention to the development of inflation, and the rate hike path is not fixed after the reservation.
Therefore, the Fed’s July resolution is difficult to have a tendency to favor the hawks, which will be more bullish gold. But it is not completely risk-free. Once the Fed’s resolution states that the unexpected style changes, and that low inflation and weak economic data are temporary factors, it will suppress gold, but given that gold is still safely supported in the near future, gold is also expected. There will be no large corrections.
According to Bloomberg's latest forecasting model, the probability of a rate hike in September fell to 19%, and in December it fell to 47.6%.
★★★ Question 2: Can US GDP in the second quarter reverse the decline in the first quarter?
Beijing second quarter GDP data will be released at 20:30 on Friday (July 28). After a quarter of exhaustion, the US economy needs a good result in the second quarter of the economy to prove that the weakness of the first quarter is really only a temporary factor. The results of this data will also affect the market's expectation that the Fed will raise interest rates and shrink the table in the second half of the year. The market currently believes that US GDP growth will reach 2.5% in the second quarter.
(The picture shows the US GDP trend)
TD Securities pointed out that only the data is around 2.5% or even higher, which can prove that the US economy rebounded to a higher level. If it is only close to 2%, it shows that the US economy still has not changed much.
The chart shows that the Federal Reserve Bank's GDP Now model predicts that US economic growth will fall to 2.4% in the second quarter.
The Federal Reserve Bank of New York is more pessimistic and predicts that the US economy will grow by only 1.9% in the second quarter of 2017.
For gold, if the data is above 2.5%, it will form a significant pressure. On the contrary, for the gold bulls, it is largely positive.
★★★Question 3: Is there a new “moth moth†in Trump’s “TongRumen�
As we all know, the fermentation of Trump's "TongRumen" incident has been a factor that has recently stimulated safe-haven assets to embrace gold. According to foreign media reports, Trump's "TongRumen" special prosecutor will expand the scope of the investigation to Trump's corporate transactions and the transactions of his family and assistants. After the exposure of Trang’s ordinary Russian new evidence on the previous day, Trang’s ordinary Russian state of affairs has become increasingly serious, and Trump himself and his son-in-law will be included in the investigation. It is reported that Trump is now consulting lawyers on the immunity of the "TongRumen" investigation.
Not only did the "TongRumen" plague Trump, but the White House news team made major changes, and the market also cast a shadow over the stability of American politics. White House deputy spokeswoman Sarah Sanders announced last Friday (July 21) that spokesperson Sean Spicer resigned and President Trump appointed Anthony Scaramucci as director of the White House Communications Office. Scaramucci then said that Sanders will serve as the new White House press spokesperson. A number of US media reports, Speyer resigned because of the dissatisfaction with Trump's appointment of New York financier Scaramucci as director of the White House Communications Office.
It is expected that Trump will have a follow-up this week, and will not stop this way. It is not ruled out that there will be more exciting news, which will continue to provide safe-haven support for gold.
★★★Question 4: Will the dollar continue to plunge?
The recent weakening of the US dollar has made it increasingly clear that support for gold has risen. Different from the first half of the year, there have been cases of “same rise and fallâ€. The negative correlation between the two is gradually strengthening in the second half of the year. Some analysts believe that the US economic data continues to shine "red light", investors leveraged the Fed's probability of raising interest rates in the coming months. The weak dollar supports gold, and for investors holding other currencies, gold will look cheap.
At the same time, Trump’s “TongRumen†incident was also a factor that plunged the dollar.
As for the US dollar this week, it will not continue to fall. In addition to the technical aspects, the news fabric plays a relatively large role. In particular, this week there are Fed resolutions, as well as economic data headed by US second-quarter GDP. It is expected that the trend of the US dollar will closely monitor the news. Once the news starts to benefit the dollar, gold is likely to usher in a profit. Conversely, if the Fed is a dove, and the US economic data continues to be weak, gold is expected to gain momentum again.
★★★ Question 5: What is the performance of other US economic data?
In addition to the release of US second-quarter GDP data this week, there are other important US economic data that are expected to have an impact on the short-term of gold.
US durable goods data
Durable goods order data, which has been weak since March, is unlikely to change significantly in the short term.
Core PCE price index
The US core PCE price index remains in a downturn and is also an important factor affecting the Fed’s interest rate hike. This week, it is expected that the data will also have obvious signs of recovery.
University of Michigan Consumer Confidence Index
The US consumer confidence index will drop significantly in recent months. If the data released this week will not change, it will indicate that the US economic outlook may continue to be bleak.
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