Precious metals fluctuate greatly, officials pour cold water on interest rate cuts, the dollar index retreats sharply, and gold can still rise?

(1) This week's views

We know that under normal circumstances, the trend of gold futures mainly revolves around the three main lines of inflation in the United States, the economic level in Europe and the United States, and the stability of the financial system. And gold is often seen as a safe haven, although gold has been under pressure this year on strong U.S. economic data, fears of further interest rate hikes by the Federal Reserve, and the strength of U.S. Treasury rates and the U.S. dollar. However, the intensification of the Palestinian-Israeli conflict after the National Day triggered a new round of risk aversion in the market.

The re-ignition of the powder keg in the Middle East during the National Day brought global political and financial uncertainty, boosted the demand for safe-haven assets, and made gold's safe-haven attribute surge, becoming a "V-shaped" reversal of gold after the National Day, which also caused gold prices to rise for two consecutive months, and the expectation of interest rate cuts provided further support. At the same time, gold's status as a reliable store of value tends to perform well in times of economic and geopolitical uncertainty, and geopolitical conflicts continue to escalate, accelerating the shift of funds to "safe assets" such as gold.

After the Fed released a dovish signal last week, market expectations for interest rate cuts once rose sharply, boosting international gold prices. The Fed seemed to be unexpected, believing that the market's expectations were a bit too much, and in the following days, some officials issued a voice to "pour cold water" on the market and entered the "correction" mode. A number of Fed officials stressed that it is too early to consider cutting interest rates, and that future policy will still be based on data that will be released one after another. In particular, last Friday, New York Fed President Williams said in a speech that the Fed is still watching whether its monetary policy is on the right path and whether it can continue to push inflation back to its 2% target, and that the Fed is not really talking about a rate cut right now, and it is "too early" to consider a rate cut in March.

According to the FedWatch tool, the interest rate futures market on Friday priced in less than a 70% chance of a Fed rate cut in March, compared with nearly 80% late Thursday. The Fed's interest rate cut path is still expected to be repeated, indicating that the game with reality will continue, and the volatility of precious metals prices is expected to increase.

To sum up, for the future market of precious metals, Xiao Chu believes that precious metals are still in an upward trend in the medium and long term; However, the short-term pullback continues to be more pronounced. Therefore, it is recommended that it is better to go short and short on the high and wait for the low position to intervene in the long order again. From a personal point of view, investment is risky, and you need to be cautious when entering the market, just for your reference!

(2) Market review

Last week, the international gold price opened at $2,020 per ounce, with an intraday high of $2,062.9 per ounce, a low of $1,987.9 per ounce, and a closing price of $2,033.8 per ounce, up $13.4, or 0.64%.

Last week, the main domestic Shanghai gold futures contract opened at 475 yuan/gram, the highest price was 477.94 yuan/gram, the lowest price was 467.7 yuan/gram, and the closing price was 475.46 yuan/gram, up 0.26 yuan/gram, or 0.05%.

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The opening price of the silver main force is 5999

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(3) Fundamental dynamics

(1) Weekly news:

Gold futures fell for a third straight day on Monday, closing below the key $2,000 mark as the dollar strengthened. Market participants are looking forward to several important central bank meetings this week, as well as US inflation data later this week, to learn more about future monetary policy moves.

Waterler, chief market analyst at KCM Trading, said that after the release of strong US employment data on Friday, the market's expectations for the Federal Reserve (rate cut) next year have been adjusted, which has provided support for the dollar and bond yields, and put some downward pressure on gold.

After the recent rise in gold prices to record all-time highs, the world's second-largest gold miner Barrick Gold (GOLD. US) predicts that the upside risks to gold prices in the future far outweigh the downside risks. Barrick Gold CEO Mark Bristow said on Monday that markets were underestimating the damage that Western central bank tightening cycles were doing to their respective economies.　　

Gold futures fell slightly on Tuesday, marking the fourth consecutive day of declines. The surprise rise in the US consumer price index in November sent gold prices back from early gains. Traders are eyeing this week's major central bank policy meetings for clues on future monetary policy.

U.S. inflation data released on Tuesday showed that the consumer price index (CPI) rose 0.1% month-on-month and 3.1% year-on-year in November, in line with economists' expectations. In contrast, the CPI was flat in October from the previous month. On an annualized basis, the core CPI rose 4.0% year-on-year in November, also in line with market expectations.

As the outlook for gold improves in 2024, analysts at Deutsche Bank have raised their price targets for gold. By the end of 2024, the quarterly average of the gold price will reach $2,150/oz, with the potential to exceed $2,200/oz, according to a Deutsche Bank research report.

Gold futures on the Chicago Mercantile Exchange (COMEX) rose on Wednesday as the Federal Reserve announced the end of its rate hike cycle and said it could start cutting rates next year. The dollar index posted its biggest one-day drop in a month after the Federal Reserve's monetary policy decision was announced, with a weaker dollar making gold cheaper for overseas buyers.

Fed Chair Jerome Powell said that inflationary pressures in the United States have eased, unemployment has not risen sharply, and the full impact of monetary tightening may not be felt yet.

The U.S. producer price index (PPI) was unexpectedly flat in November, suggesting that factory price inflation continues to subside, the data showed.

Gold futures rose strongly on Thursday to hit a fresh 10-session high after the US dollar and US Treasury yields fell after the Federal Reserve signaled an end to its monetary policy tightening cycle.

Gold futures edged lower on Friday after rising 2.4% on Thursday, but still rose more than 1% on a weekly basis as the Federal Reserve pivoted to a dovish stance and expects a series of interest rate cuts to begin next year.

Market participants on Friday were pricing in less than a 70% chance of a rate cut in March, compared with nearly 80% on Thursday night, according to the Fed Watch tool. Market participants expect the Fed to cut its benchmark interest rate by 140 basis points next year.

(2) Gold ETFs and the U.S. Dollar Index

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As of December 15, the gold ETF holdings increased by 2.02 tons from the previous day, and the current holdings are 879.69

Ton.

We know that the US dollar and gold, as global safe-haven tools, have a strong mutual substitution relationship, and in the medium and long term, the two show a negative correlation. Because gold is denominated in US dollars, the strength of the dollar index has made gold more expensive for overseas investors, and the rise in the dollar has also weakened gold's appeal to buyers holding other currencies.

Over the past week, the U.S. dollar index has fallen slightly. The week opened at a price of 104, with an intraday high of 104.26 and an intraday low of 101.76; It ended the week at 102.59, down 1.34%.

Important: The information contained herein is derived from publicly available information and is not guaranteed to be accurate or implied in terms of accuracy, reliability, timeliness and completeness. The views and information published in this article are for investors' reference only and do not constitute investment advice to anyone. The risks and returns of futures are relatively large, please participate cautiously, sincerely apologize for the inconvenience caused to you, thank you for your understanding and cooperation!

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