Spot gold rebounded slightly to trade around $1779 in Asia on Feb. 18, after falling for five straight days on Feb. 17, as the stronger dollar and better-than-expected U.S. economic data reduced gold's attractiveness as a safe haven. The minutes of the Fed's January meeting show that Fed officials believe that the conditions for scaling back its asset purchase program will be difficult to achieve for some time, which means that the Fed will maintain ultra-loose monetary policy for a long time. After five consecutive falls, the 50-day moving average and the 200-day moving average formed a death crossover, which is very disadvantageous to the future trend of gold. The short-term gold price is at risk of falling below the November 30 low of 1764, and the next support may be in the first line of 1700.
During the day, we will focus on the data of initial unemployment benefits. In addition, we can pay appropriate attention to the US import price index in January, the annualized data on new housing starts in January, and so on. Also today, Federal Reserve Governor Brainard and Atlanta Federal Reserve Chairman Bostick will make speeches.
The good performance of US economic data hits the price of gold.
Us retail sales rose at their fastest pace in seven months in January, reflecting a rebound in household demand after a weak performance in the fourth quarter, thanks to factors such as the government's bailout cheques to deal with the impact of the epidemic.
Overall retail sales rose 5.3% month-on-month, with significant increases in all major categories, according to data released by the commerce department on Wednesday. It fell by 1% in December. The median forecast by analysts is 1.1% growth.
Consumer spending was restricted by the intensification of the epidemic at the end of 2020, but since then the number of new cases has gradually declined, and states have begun to relax some restrictions on business and activities. The resumption of shopping and dining out, coupled with a new round of bailout cheques for $600 per person, have helped boost spending on all types of goods.
Us manufacturing output grew faster than expected in January and rose for the fourth month in a row, indicating that the industry continues to recover from the disruption caused by the novel coronavirus epidemic. Manufacturing output rose 1 per cent month-on-month, compared with 0.9 per cent in December, according to data released by the federal reserve on Wednesday. Economists expect an increase of 0.7%. Overall industrial output, including mining and utilities, rose 0.9 per cent month-on-month in January and was revised to 1.3 per cent in December.
The manufacturing output index is only 1.9 per cent lower than the pre-novel coronavirus level, indicating that the industry is benefiting from low inventories and stable demand. Although there are still challenges of supply chain disruptions and labour shortages, the disadvantages of the epidemic will gradually fade with the increase in the number of people vaccinated.
There was a wide range of growth in manufacturing output, with a general increase in the production of consumer goods, commercial equipment, construction materials and non-durable goods. At the same time, the Fed said car production fell due to a shortage of semiconductors.
Marc Chandler, chief market strategist at Bannockburn Forex, said: "Today's retail sales figures are not only stronger than expected, but also much better than expected. The same is true of industrial production data. "
Optimistic economic data and signs of stronger inflation helped push the dollar higher against a basket of currencies, with the dollar index rising 0.4 per cent to 90.94 on Wednesday, while gold tumbled again, falling 1.02 per cent.
Chandler added: "this price trend began on Tuesday and what we are seeing today is a continuation. There are a lot of people who are still bearish on the dollar, but there is more room for this upward trend. "
David Meger, head of metals trading at High Ridge Futures, said the US economy was expected to recover slowly, with optimism about overcoming the novel coronavirus epidemic reflected in a slightly stronger dollar and 10-year Treasury yields, which rose to their highest level since February 2020. Break-even inflation, which measures expected inflation, reached 2.2 per cent, the highest level since August 2014.
Craig Erlam, a senior market analyst at Oanda, said the rise in U.S. Treasury yields made investors nervous and generally good for the dollar. The return of the ICE dollar index above 91 may be a bullish signal for the dollar, which is naturally disadvantageous to the development of gold.
Yields on US Treasuries, a direct haven competitor to gold, have risen to their highest level in months, making them more attractive to investors than unyielding commodities.
Jason Teed, a mutual portfolio manager at Gold Bullion Strategy Fund, said rising bond yields have put downward pressure on gold, so trends make the dollar and Treasuries more attractive to store value than gold.
The epidemic has gradually cooled down, but vaccination still needs to be accelerated.
Although the epidemic in major countries has generally cooled down, countries still face all kinds of vaccination problems.
Preliminary Pentagon data show that about 1/3 have been refused vaccination by the US military that provided the novel coronavirus vaccine.
Vaccination is still voluntary for active military personnel, because so far, vaccines developed by Pfizer and Moderna have only been authorized for emergency use by the Food and Drug Administration ((FDA)), the Pentagon said at a House panel meeting on Wednesday. That will change when the FDA is fully approved, as many other vaccines are mandatory for military personnel.
German Health Minister Jens Spahn said the mutated new crown virus strain first found in the UK now accounts for more than 20 per cent of German cases. "We have to assume that it will soon dominate," Spahn said in a tweet on Wednesday, citing Robert Koch Institute data. The share of South African and Brazilian mutants is also increasing, but at a much lower level. "
Just a few weeks ago, the European Union was clamoring to get the novel coronavirus vaccine from AstraZeneca. It has been a short time since the vaccine was launched in Germany, but the quantity used is less than 1/10 of the quantity delivered to the country. Some health professionals say they are worried about the side effects of the vaccine.
The relief of the epidemic has increased the risk sentiment of the market, which is quite disadvantageous to the future trend of gold prices.
Fed officials believe that the conditions for scaling back asset purchases will be difficult to meet for some time.
Fed officials at their January policy meeting believed that the conditions for scaling back their massive asset purchases would be difficult to achieve for some time, according to the minutes of the Fed meeting.
"given that the economy is still far from these goals, participants judged that it may take some time to make further substantive progress," said the minutes of the Fed's January 26-27 policy meeting released on Wednesday. "
Treasury yields have risen since the start of the year on increased optimism that President Joe Biden and congressional Democrats will push for more fiscal stimulus measures to accelerate the economy's recovery from the effects of the coronavirus pandemic.
"several participants pointed out that it was important that before it was concluded that sufficient substantive progress had been made to justify adjusting the pace of purchases, the Committee had to communicate clearly with the market long-term progress in advance of its assessment of progress towards long-term goals."
The improving economic outlook has heightened investor speculation about when the Fed will start to scale back its bond-buying program. The Fed currently buys $120 billion of Treasuries and mortgage-backed securities a month and says it will maintain that pace until the economy makes "further substantial progress" towards its target of full employment and 2 per cent inflation.
Some investors began to pay attention to the threat of unnecessary inflationary pressures caused by ultra-loose monetary policy. But Fed officials are expected to ignore temporary factors that push up prices in the coming months, according to the minutes.
"many participants stressed the importance of distinguishing between one-off changes in relative prices and changes in underlying trends in inflation," the minutes said. " These one-off changes "may raise inflation indicators temporarily, but will not have a lasting impact."
The minutes of the Fed's meeting once again confirm the prediction that the Fed may not scale back its bond purchases during the year, which is a potential boon for gold prices.
The Prospect of Today's Gold Market
Today's focus is on initial jobless claims data, which is expected to be slightly better than the previous value, in line with the economic recovery shown by economic data on Wednesday, and will be negative for gold prices.
After five consecutive short-term falls in gold prices, the most active gold futures traded on Wednesday formed the first death crossover since June 2018, with the 50-day moving average falling below the 200-day moving average, according to Dow Jones market data. this is widely seen as the tipping point between the long-term upward trend and the downward trend.
Death crossover is not an ideal development for gold, especially since it hasn't happened in more than two years, said Craig Erlam, a senior market analyst at Oanda.
David Russell, director of communications at GoldCore, said that technically, gold looks weak right now, but it should have good support in the range of $1755 to $1765, and if it falls below this area, the support will fall to $1700.
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