Spot gold held steady around 1813 in Asia on Wednesday. Gold prices rose slightly on Tuesday, with the US consumer confidence index falling to a six-month low in August and the dollar index hitting a more than three-week low at one point, while the cooling of risk sentiment also helped the gold price rise.
During the day, we will focus on US ADP employment in August and ISM manufacturing PMI in August.
Fundamentals are bullish.
[us consumer confidence index fell to a six-month low in August]
U. S. consumer confidence fell to a six-month low in August, suggesting that concerns about the Delta strain and rising prices are dragging down the economic outlook.
The index of consumer confidence fell to 113.8 in July from a revised 125.1 the previous month, according to data released by the World Association of large Enterprises on Tuesday. The economists surveyed had expected it to be 123.
These data suggest that the spread of Delta virus weakens consumer confidence in the economy and has the potential to curb consumption in the service sector. The recent surge in the number of novel coronavirus infections has depressed restaurant bookings, air travel and hotel occupancy. At the same time, increased spending by Americans on supermarkets and gas stations could further dampen consumer confidence.
"concerns about the new coronavirus strain and concerns about rising gasoline and food prices have affected people's views on the current economic situation and short-term growth prospects," Lynn Franco, senior director of economic indicators at the World Institute of large Enterprises, said in a statement.
The World Institute of large Enterprises's indicator of the state of the economy fell to 147.3, the lowest level since April. Consumer perception of the current business environment declined, with the index of economic expectations falling to a seven-month low of 71.4.
[all three major US stock indexes closed down slightly]
Us stocks closed slightly lower on Tuesday, with the s & p 500 and the Dow both down about 0.1 per cent.
After all hitting record highs in the second half of the month, the three major indexes were weighed down by technology stocks on the last day of August. Before Tuesday, the S & P 500 hit a record closing high for the fourth of five trading days.
The s & p 500 rose 2.9% in august, its seventh straight month of gains, with the Dow Jones industrial average up 1.2% and the NASDAQ up 4%.
The performance reflects investor confidence in the US stock market, which stems from the Fed's continued dovish tone to scale back its massive stimulus package.
While US stocks have been boosted by economic growth and a strong recovery in corporate earnings, investors are worried about a rise in the number of new cases and the Fed's policy path.
[the dollar hit a three-week low]
The dollar fell to a more than three-week low against a basket of currencies on Tuesday as investors focused on US jobs data released later this week to understand the Fed's possible monetary policy path.
Federal Reserve Chairman Colin Powell said at the Jackson Hole meeting on Friday that the Fed may begin to scale back its bond-buying program this year, but is in no hurry to raise interest rates, and the dollar has been struggling ever since.
Erik Bregar, director and head of foreign exchange strategy at Exchange Bank of Canada, said: "if the employment figures are disappointing, then there is another reason for the euro / dollar to rise again, as all the doves will come out and say that the Fed will not scale back its bond purchases in September."
At one point, the dollar scaled back some of its losses after the S & P / CoreLogic Case-Shiller 20 major cities composite index showed that single-family home prices in 20 major US cities rose at a record high in June from a year earlier.
The dollar then fluctuated, with the Chicago purchasing managers' index falling less than expected in August, but the dollar resumed its decline again after the World large Enterprise Research Institute (the World Enterprise Research / Conference Board) consumer confidence index was lower than expected. Concerns about soaring new cases and rising inflation have hit the economic outlook.
Fundamentals are bearish
[Knot says euro zone inflation may prove that the ECB can end the crisis model.)
Klaas Knot, a member of the ECB's governing council, said the inflation outlook in the eurozone may have improved significantly, justifying the ECB's immediate slowdown in stimulus, ending its pandemic emergency bond-buying programme (PEPP), in March and returning to pre-crisis financial discipline.
Referring to the policy options to be discussed at next week's management committee meeting on Tuesday, the Dutch central bank governor Knot said he hoped the final decision would not contradict the end of the bond-buying program in March. "this will mean slowing down purchases."
Although inflation is now at its highest level in a decade, the ECB has taken a more cautious approach than other global central banks such as the Federal Reserve, maintaining ultra-loose policies to support Europe's fragile economic rebound in the face of a resurgence of the epidemic.
Some officials, including Knot, insist that a better economic outlook means that the current emergency policy period should be clearly defined. In a separate interview on Tuesday, his colleague Robert Holzmann said it was necessary to reduce bond purchases as the economic outlook improved.
The ECB will have a preliminary debate next week on whether to maintain a high pace of bond purchases. The management committee also needs to decide in the coming months whether to extend or end its massive bond-buying program in March and how to continue its more traditional QE programme, the asset purchase program, (APP).
Knot said that the two plans were discussed in completely different circumstances, so the initial proportion assessment was also completely different. "some of the flexibility of PEPP is inconsistent with some of the safeguards of APP."
This suggests that Knot will be one of the hawkish members of the ECB, arguing that the APP should maintain its stricter rules and that the amount of purchases should be commensurate with the size of each country's economy.
[gold ETF position: SPDR gold position decreased by 1.46t]
Gold ETFs data showed that the world's largest gold ETF-SPDR Gold Trust held 1000.26 tons of gold as of Aug. 31, down 1.46 tons from the previous trading day.
[the use of overnight reverse repurchase tools by the Federal Reserve hit a record high]
The glut of money in the US money market has led to record amounts of money deposited by investors with one of the Fed's main instruments.
Data released by the New York Fed showed that there were 82 participants in the Fed's overnight reverse repurchase operation on Tuesday, spending a total of $1.19 trillion on the tool, surpassing the previous record high of $1.147 trillion set on Aug. 25.
As the new month enters on Wednesday, the use of the tool is expected to decline, but with huge amounts of money showing few signs of ebbing, demand will eventually rise.
Data foresight
During the day, we will focus on US ADP employment in August and ISM manufacturing PMI in August.
ADP employment data are the leading indicator of consumer spending, accounting for the bulk of overall economic activity. Two days ahead of the official non-farm payrolls data released by the Labor Department, it is seen as a leading indicator of non-farm data.
Small non-farm accidents recorded 330000 in July, while non-farm payrolls increased by nearly 1 million in July, testing the foresight of small non-farm data. This time, small non-farm payrolls are expected to rise sharply to more than 600000 from the previous value, which may be bad for gold prices to a certain extent.
ISM manufacturing PMI declined slowly after reaching its peak in March, and the Delta virus epidemic also had a greater impact on the manufacturing sector. PMI is expected to continue the downward trend, which may be positive for gold prices.
Overall, gold prices continue to stand firmly above the 1800 mark and 200-day moving average, the pattern is relatively favorable for bulls, gold prices are expected to rise further.
