Overnight, spot gold rebounded, rising for 2 consecutive trading days, and gold rose nearly $54 in 2 trading days, touching $2,360, up 2.9% this week.
Federal Reserve Warning!
Overnight, the three major U.S. stock indexes opened slightly higher, and collectively dived after rising in the short term, and the Nasdaq index fell significantly, and then rebounded. At the close, the Nasdaq fell 0.03%, the Dow Jones Industrial Average and the S&P 500 rose 0.32% and 0.16% respectively.
Regarding the trend of U.S. stocks, analysts said that consumer sentiment was hit by high inflation stickiness, and at the same time, Federal Reserve officials were "hawkish", which dampened the sentiment of the U.S. stock market.
The preliminary U.S. University of Michigan consumer sentiment index for May released last night was 67.4, significantly worse than the expected 76, and well below the previous month's 77.2, the largest decline since August 2021.
In addition, consumer inflation expectations have picked up. Expectations for inflation in the year ahead reached 3.5%, the highest in six months and up from 3.2% expected in April. Inflation expectations for the next 5-10 years are at 3.1%, also higher than the level projected in April.
Traders who had been focusing on "inflation expectations" were even more dumbfounded when they saw the consumer confidence figure, which could indicate a reduction in consumer spending in the coming months, even in anticipation of a rise in inflation.
Paul Ashworth, chief North America economist at Capital Economics, said: "It's really hard to explain because there's little evidence of any major recession in the labor market, and consumers may also be uneasy about the fall in equities in mid-April." ”
At the same time, the first Fed official to directly rule out the possibility of a rate cut this year appeared.
On the 10th local time, Michelle Bowman, a member of the U.S. Federal Reserve, said that it is not appropriate for the Fed to cut interest rates this year due to persistent inflationary pressures.
With the end of the Fed's silence period, a number of officials spoke this week, and even two officials with a hawkish stance – Minneapolis Fed President Kashkari and Boston Fed President Collins – did not directly rule out a rate cut this year.
The Fed continued to hold its nerve at last week's interest rate meeting, leaving the target range for the federal funds rate unchanged at 5.25% to 5.50%. The federal funds rate has remained at its highest level in 20 years since July last year.
Speaking of perfect stocks, let's take a look at the performance of A-shares this week.
Most stock indexes rebounded this week, with a turnover of 4.75 trillion yuan in Shanghai and Shenzhen this week, of which 2.11 trillion yuan in Shanghai and 2.64 trillion yuan in Shenzhen. At the latest close, the Shanghai Composite Index closed at 3,154.55 points, up 1.6% for the week, and the Shenzhen Component Index closed at 9,731.24 points, up 1.5% for the week.
A message was released today about the funds going north.
Today, HKEX announced that, following the successful completion of the pre-launch test today, the adjustment of the real-time turnover and daily quota balance of Northbound trading will be officially implemented on 13 May (Monday) following the successful completion of the pre-launch test today.
In other words, starting next Monday, the real-time buy transaction amount, sell transaction amount and total transaction amount of SSE Stock Connect will no longer be disclosed.
For the recent market, analysts said that the continued net inflow of foreign capital and the strengthening of the yuan mean that China's asset repair may continue. In the context of policy strengthening and improving economic expectations, the pro-cyclical sector is optimistic about the rebound opportunities of real estate development, building materials, insurance and other real estate chains, as well as real estate-related food and beverages in the short term; In the medium term, we are optimistic about the quality style-related assets with strong profitability, one is the overseas chain, such as home appliances, automobiles, machinery, light industry and other industry leaders, and the other is the chemical and non-ferrous industry leaders in the context of rising resource prices.
In addition to this, investors need to pay attention to the news on the international situation.
Russian troops attack Kharkiv!
On May 10, local time, Russia suddenly launched a ground offensive against the Kharkiv region in northeastern Ukraine on the same day.
According to the Ukrainian Ministry of Defense, the attack took place around 5 a.m. local time and Russia tried to break through Ukrainian lines under the cover of armored vehicles. Ukraine reported repelling the Russian attack, but "fighting of varying intensity" continued, with Russia launching airstrikes near the border.
At the moment, the Russian Ministry of Defense has not made any comments, but Russian military bloggers report that heavy fighting is taking place in the area.
If confirmed, this Russian action will be the Kremlin's largest ground operation in the region since the outbreak of the Russia-Ukraine conflict in February 2022. This week, Russia said it had captured at least two villages in the Kharkiv region.
In addition, Israeli attacks on the Gaza Strip have "escalated significantly."
On the 10th local time, the Israel Defense Forces said that they would carry out military operations in the eastern part of Rafah, a southern city in the Palestinian Gaza Strip, and the central part of the Gaza Strip, and said that they would "intensify" military operations in Rafah.
The Palestinian side said that the Israeli army's attack on the Gaza Strip that day had "escalated significantly".
On the same day, Palestinian armed groups reported exchanging fire with Israeli forces in various parts of Gaza and firing rockets at Israel.
With regard to the Palestinian-Israeli conflict, there are other developments, and the General Assembly has adopted a resolution on the accession of Palestine to the United Nations.
On the morning of May 10, local time, the 10th emergency special session of the United Nations General Assembly deliberated on the issue of admitting Palestine as a new member of the United Nations, and voted to adopt a resolution granting more rights to Palestine. By 143 votes in favour, 9 against and 25 abstentions, the resolution was adopted. The United States, Israel, etc. voted against.
It is worth mentioning that in his statement before the start of the vote, Israel's Permanent Representative to the United Nations, Edan, was at the General Assembly, using a small paper shredder, to shred a copy of the Charter of the United Nations to express his opposition to the special session and to say that the United Nations had become an 'irrelevant body'".
How will the gold market go?
Next week, the market will focus on the US Producer Price Index (PPI) and Consumer Price Index (CPI), which could have a significant impact on gold prices. Analysts widely expect CPI to begin to "cool down" after beating expectations for three consecutive months due to the downturn in housing inflation.
Financial markets expect the Fed to begin easing its monetary policy in September, and the performance of inflation data will directly affect this expectation.
Judging from the medium- and long-term trend of gold prices, although the rally will not be smooth sailing, the current round of gold's upward trend is far from over.
For now, analysts remain bullish on gold's performance over the next 12 months, with Standard Chartered raising its 12-month price target to $2,350. If the Fed starts cutting interest rates in the second half of the year, gold's relative attractiveness will rise further.
Although gold may have some pullback pressure in the near future due to the take-profit exit of gold bulls, there is still room for growth in the medium and long-term perspective.