House Speaker McCarthy’s government funding plan was opposed by hardliners in the party. According to the plan, the budgets of domestic government agencies will be cut by 8% and construction of the wall on the southern border will be resumed. At least 10 hard-line lawmakers have announced their opposition to the package, and conservative critics are demanding a series of changes, including deeper spending cuts, halting funding for investigations into former President Trump and blocking previous Ukraine aid programs. expenditure.
Related to the U.S. auto strike:
U.S. Treasury Secretary Yellen: It is too early to predict the impact of the auto strike on the economy. The labor market is cooling, but there are no large-scale layoffs. There is no sign that the economy is in recession. We will pay close attention to oil prices and oil production.
The U.S. Auto Workers Union is reported to have lowered its demand for a wage increase to 36%.
On September 18, local time, according to data released by the U.S. Department of the Treasury, the total U.S. national debt exceeded 33 trillion U.S. dollars for the first time on the 18th. China’s holdings of U.S. treasury bonds in July were 821.8 billion U.S. dollars, a decrease of 13.6 billion U.S. dollars from the previous month. Reduce holdings in four months. Japan’s holdings of U.S. Treasury bonds in July were US$1.1125 trillion, an increase of US$6.9 billion from the previous month.
MARKET VIEWPOINTS
Capital Economics
Gold has been falling since safe-haven demand pushed gold prices to around $2,000 an ounce from March to May this year. As the U.S. economy continues to grow and inflationary pressures ease, gold prices are expected to fall to $1,800 per ounce by the end of the year. According to data from the World Gold Council, global gold demand fell by about 5% year-on-year in the first half of this year, mainly due to a decline in investor demand for investment through ETFs, while gold supply increased slightly during the same period. We expect the U.S. economy to contract only slightly in the fourth quarter before recovering next year, with U.S. inflation falling close to the Fed’s 2% target by mid-2024. Demand for the precious metal is therefore forecast to fall further as investors reduce demand for gold as a hedge against severe recessions and high inflation. To be sure, our U.S. economic outlook is consistent with lower investor interest rate expectations, but we believe the downward pressure on investment demand from a “soft landing” in the U.S. will more than offset any upward pressure from lower interest rate expectations. Looking at both supply and demand, high gold prices have suppressed demand for gold on the one hand, and will continue to stimulate supply on the other. In addition, the currencies of major gold consuming countries in Asia have weakened relative to the US dollar. It is predicted that this factor will continue to affect the gold demand for jewelry in the second half of the year.
Daliyfx analyst Daniel Dubrovsky
Gold prices have risen for several consecutive trading days, and retail investors have responded by increasing their downside risk exposure. This can be seen through the IGCS indicator. About 70% of retail investors hold a net long position in gold, which means that most The bias is bullish, with downside exposure increasing by 9.49% and 3.59% compared to yesterday and last week respectively. With this in mind, recent changes in exposure suggest that gold prices may soon reverse higher. Judging from the daily chart, the recent rise has pushed gold prices to break through the downward trend line since May. The immediate resistance is the inflection point of 1936.90. Breaking this level will expose the 23.6% Fibonacci retracement level of 1971.63, which is an increasingly bullish trend. Technology bias opens doors. Otherwise, a false breakout would bring focus back to the 382% point near 1903.46, which would then expose the August swing low at 1884.37. A breakout confirming the latter opens the door to a continuation of the downward trend from May.
Merk Investments
With the Fed set to keep interest rates on hold this week, the idea of a rate cut may come sooner than many expect, although we don’t think Fed Chairman Powell has a real strategy. The Fed sticks to its current stance hoping that things will somehow normalize, and what ends up happening is that the Fed does nothing. The problem is that inflation is not linear, and inflation data is not the most reliable indicator of the Fed’s actions in September, November and December.
Historically, when the economy weakens, the Fed adjusts and eases monetary policy. But options are limited after the Fed pledged to keep interest rates higher for longer. We will be watching the next inflation data, and the Fed may be more restrictive for a longer period of time, which is part of the reason why we do not believe in the soft landing scenario. Another problem is that the Fed has been slow to respond to changes in the economy, which is why they have been slow to raise rates before and will be slow to ease in the future. A delayed response to slowing economic growth could lead to a deeper recession, and the Fed doesn’t want to be accused of repeating the mistakes of the 1970s, which is why they will be slow to cut interest rates.
Without ruling out the possibility of a rate cut by the Fed early next year, Powell will say that discussing rate cuts does not necessarily mean easing monetary policy, and this “mental gymnastics” will come into focus at some point in the coming months. Powell is expected to say: “If the Fed is going to cut interest rates, it’s not really a cut because it’s just making sure that real interest rates are not too high.” And gold will benefit from this situation and rise.
As the U.S. economy slows, markets will be more volatile and people are uncertain about what actions the Fed will take and what the impact will be. As U.S. consumers have lost momentum, economic growth will be severely hit. The damage to economic growth will be more serious than market pricing, and the risk of a hard landing for the U.S. economy is high. 2024 is an election year, and the economic situation will become more complicated.
Dailvfx analyst Richard Snow
Gold prices are signaling a continuation of their upward trend in the near term, but may lack momentum ahead of this week’s economic data. The market is mainly focused on the FOMC’s interest rate decision and the latest quarterly forecast. The federal funds futures market predicts that the FOMC will almost certainly keep interest rates unchanged. Following the statement, latest data and press conference, gold is likely to have an impact on the value of the US dollar and US Treasury yields. React. U.S. Treasury yields have been edging higher on expectations the Federal Reserve will keep policy at restrictive levels for longer. Therefore, rising gold prices may come under pressure ahead of the Fed meeting. Regarding other central bank interest rate decisions, such as the Bank of England and the Bank of Japan, I do not expect the Bank of Japan to take action, but market expectations are leaning towards a 25 basis point hike on Thursday.
From a technical perspective, gold prices started the week on a moderate trend, testing the 200-day simple moving average in the process. Gold showed a “higher lows, lower highs” trend, with $1,937 being the most direct. Resistance is roughly in line with trendline resistance, with support emerging at $1,915, followed by the swing low at $1,901.
