Spot gold has a limited increase, and the market has judged whether the data can spur fed to accelerate interest rate increases

Spot gold strengthened slightly on Tuesday (December 7), but the intraday volatility range was less than $8, and news about the Omicron variant gave the market comfort, and the dollar continued to maintain bullish expectations, limiting the momentum of the gold rally. Investors are judging whether the upcoming US November CPI data will prompt the Fed to raise interest rates earlier.

At 20:19 Beijing time, spot gold rose 0.21% to 1782.92 US dollars / ounce; the COMEX gold main contract rose 0.24% to 1783.7 US dollars / ounce; the US dollar index rose 0.10% to 96.403.

Positive voices continue to be heard in the fight against the pandemic

While Omicron has spread to about a third of the U.S. states, preliminary observations suggest that Omicron patients have only mild symptoms, Dr. Anthony Fauci, the nation's chief infectious disease specialist, told CNN: "So far, it doesn't look serious." ”

British drugmaker GlaxoSmithKline on Tuesday cited new data from earlier studies to say its antibody-based COVID-19 therapy, developed in collaboration with U.S. partner Vir Biotechnology, is effective against all mutations in the Omicron variant.

Hal Barron, Chief Scientific Officer of GlaxoSmithKline, said: "Preclinical data suggest that our monoclonal antibodies have the potential to be effective against the latest Omicron variant and all other variants of concern as defined by the World Health Organization. ”

GlaxoSmithKline and Vir have been designing so-called pseudoviruses that have major coronavirus mutations in all the suspicious variants that have emerged so far and have been laboratory tested for their vulnerability to sotrovamab treatment.

The US November jobs report released on Friday (December 3) was significantly lower than expected, but the data has hardly shaken market expectations that the Fed will accelerate its bond purchases starting next year and may raise interest rates earlier, and the negative news around Omicron seems to be limited, which in turn helps the dollar to maintain its upward trend.

Inflation is expected to rise flat next year

The US Consumer Price Index (CPI) for November, which will be released on Friday (December 10), will be a key determinant in measuring the Fed's next move. Fed Chairman Jerome Powell clearly shook his position last week. He suggested it might be time to abandon inflation for the time being, though he told Congress that the Omicron variant could jeopardize the economic recovery.

Darrell Cronk, chief investment officer for Wealth and Investment Management at Wells Fargo, said Monday that both inflation and economic growth in the U.S. next year could be around 4 percent, suggesting inflation would remain above expectations. "We think inflation will be more persistent than people expect, around 4 percent."

Economists at Barclays now expect the Fed to raise rates starting in March next year; bankers counterparts have also said expectations for a march hike are "on the rise," with former Treasury Secretary Summers saying the Fed should raise rates four times next year.

Kyle Rodda, an analyst at IG Markets, said: "In the prospect of tighter policy, gold prices should slowly weaken, and if the CPI is hotter than expected, it will only lead to expectations of more aggressive action by the Fed." ”

There are obstacles to the Fed's acceleration of interest rate hikes

Inflation has unexpectedly remained high, and global financial markets are waiting to see if this will prompt the Fed to raise interest rates earlier and faster. But supply chain threats to the economic recovery and the ongoing threat of the pandemic make the outlook for monetary policy particularly unpredictable.

The Bank for International Settlements (BIS) said on Monday that the newly discovered Omicron variant virus suggests that policymakers and financial markets cannot relax their vigilance against the COVID-19 pandemic, that uncertainty about the human and economic costs that the new variant could bring is rising, and that it is necessary to carefully adjust its policies.

Claudio Borio, head of the Bank for International Settlements' Monetary and Economics Department, said Omicron could exacerbate supply chain bottlenecks in the short term, with some impact on economic activity inevitable, especially in the first quarter of 2022, "which of course would make the trade-offs faced by central banks slightly more complicated than before." "Although people are now very accustomed to dealing with these complex issues.

The Omicron variant and its potential impact on travel and demand could hit economic activity. Goldman Sachs economists cut their 2022 economic growth forecast for the United States to 3.8 percent over the weekend from 4.2 percent.

Steve Brice, Chief Investment Officer at Standard Chartered Bank, said the Fed could tighten policy less than financial markets are currently digesting. "We know that the market expects the Fed to raise interest rates about twice next year, and at one point expected to raise interest rates close to three times," he said. We still think that there will only be one rate hike. ”

This article originated from Huitong Network