In early trading in Asia on Aug. 17, the dollar index was basically stable at around 92.63, while spot gold remained strong and was currently trading around $1789 an ounce. This trading day, investors will welcome Federal Reserve Chairman Colin Powell's speech, investors need to prevent him from making dovish remarks again. In addition, the US will release US retail sales, known as "terrorist data", which some agencies predict will perform quite badly. Analysts pointed out that if Powell stood up and the US retail sales data were weak, the dollar could suffer a major blow and gold prices were at risk of rising sharply.
Gold continued its rally on Monday, driven by falling Treasury yields and some safe-haven buying triggered by concerns about COVID-19 and the situation in the Middle East. Spot gold closed at $1786.99 an ounce, up $7.54 or 0.42%, reaching as high as $1789.20 an ounce on the day.
On Monday, the New York Fed said its manufacturing survey showed that the overall manufacturing condition index fell to 18.3 in August, down sharply from 43 in July. The figure was weaker than expected because the index was widely expected to be around 28.9. The gold market rebounded strongly after disappointing manufacturing data.
The Marketwatch reported that the New York state manufacturing index plunged to 18.3 in August from 43 the previous month, supporting gold prices higher.
Markets are also keeping a close eye on the unrest in Afghanistan. The Afghan government collapsed suddenly after Taliban militants occupied the capital Kabul. Taliban political office spokesman Mohamed Naim told Al Jazeera television on Sunday that the war is over in Afghanistan. Geopolitical instability has helped boost safe-haven demand for gold.
"Last weekend, the political situation in Afghanistan deteriorated sharply," said Carlo Alberto De Casa, a market analyst at Kineis. This may affect financial markets and gold prices, which we will reveal in the next few days. " Gold is often used as a safe hedge in times of political and financial turmoil.
Carlo Alberto De Casa, an analyst at Kinesis, pointed out that the political turmoil in Afghanistan has brought risk aversion to the market, and investors are transferring some liquidity to gold.
Daniel Ghali, commodities strategist at TD Securities, said the upward trend in gold purchases by central banks provided the basis for gold prices.
The latest weekly gold survey released by Kitco News on Friday shows that sentiment in the gold market has turned bullish again recently. Last week, 15 Wall Street analysts took part in Kitco News's gold survey. Eight of the respondents (62 per cent) thought gold prices would rise this week, while three analysts (23 per cent) expected gold prices to fall in the near future, while two analysts (15 per cent) took a neutral view.
Powell made a big speech.
On Wednesday, 01: 30 Hong Kong time, Federal Reserve Chairman Colin Powell will hold an online town hall meeting with educators and students across the United States to discuss the work of the Federal Reserve and economic education. Investors will focus on Federal Reserve Chairman Colin Powell's speech, hoping to find any information about cutting bond purchases and interest rates.
The Federal Open Market Committee ((FOMC)) decided to keep its key interest rate near zero at its policy meeting, which ended on July 28th local time. The Federal Reserve said the US economy and job market continued to strengthen, reiterating that the rise in inflation was only a temporary factor and continued to move towards a curtailed bond-buying program.
The statement reiterated the Fed's view on inflation, that is, it seeks to achieve inflation moderately above 2% for a period of time, so that the long-term inflation average reaches 2%, and longer-term inflation expectations remain firmly anchored at 2%. 'The rise in inflation largely reflects the impact of temporary factors, 'the statement said.
Federal Reserve Chairman Colin Powell released pigeons at a press conference. Powell said at a news conference that the increase in Delta variants could dampen the job market recovery and that the Fed was "some way off" from considering raising interest rates. Powell's remarks at that time led to a sharp fall in the US dollar and a sharp rise in the price of gold.
On scaling back bond purchases, Powell stressed at the time that the Fed had not yet made any decision on the timing of the reduction. The timing of debt withdrawal depends on future data and will be notified in advance of any changes. As to when it is appropriate to reduce debt, he says FOMC has many different views.
Analysts pointed out that if Powell continues to make dovish remarks, then the dollar is likely to be hit again. However, if Powell turns to hawks, the dollar is expected to strengthen.
Everett Millman, a precious metals expert at Gainesville Coins, said: "although most Fed members are becoming more and more hawkish, Powell has always stressed the need to be patient. This is a more likely approach. Economic growth is still under threat, including the Delta variant, which could block waterways. "
The initial US consumer confidence index fell to 70.2 in August, the lowest since December 2011 and down from 81.2 in July, the University of Michigan said on Friday. The figure was significantly lower than expected because the consumer confidence index was widely expected to be roughly the same as the previous value.
Forexlive analyst Adam Button commented at the time: "Powell and other Fed officials have made it clear that they do not think the Delta virus will delay or undermine the economic recovery, but they may change their minds after Friday." This is the message from the market that the possibility of shrinking debt in September has now been reduced. "
Under the new framework policy announced last year, the Fed agreed to keep interest rates close to zero until the labor market reached full employment, with an average inflation rate of 2 per cent and moderately over 2 per cent for a period of time.
Fed officials said in December that they would continue to buy bonds at a rate of $120 billion a month until further progress was made in terms of inflation and full employment.
"terrorist data" or poor performance
The most important macroeconomic data this week will be Tuesday's retail sales data. Us retail sales data are known as "terrorist data". Because they usually have a greater impact on financial markets, they are likely to have an impact on the trend of assets such as the US dollar and gold.
The United States will release retail sales figures for July on Tuesday. According to a survey by authoritative overseas media, the monthly rate of retail sales in the United States is expected to fall 0.2% in July, after an increase of 0.6% in June. Us core retail sales are expected to grow at a monthly rate of 0.2 per cent in July, down from 1.3 per cent last month.
Retail sales data play an important role in determining the current economic situation and prospects in the United States, as retail sales directly reflect changes in consumer spending.
Analysts pointed out that if the US retail sales data performed better than expected, the dollar was expected to strengthen, which would depress other major currencies and gold, while if the retail sales data were lower than expected, the dollar was at risk of further decline.
The U.S. Department of Commerce will release July retail sales on Aug. 17, EDT, and these figures are likely to be bad, Yahoo fiance reported.
According to data released last Thursday by Bank of America Global Research (Bank of America Global Research), retail sales will fall 2.3 per cent in July from the previous month, according to a report by the US Census Bureau.
Bank of America economists led by Michelle Meyer wrote: "on a seasonally adjusted basis, total credit card consumption fell 1.3 per cent month-on-month. With a further breakdown of the data, retail sales excluding cars fell by 2.4%, which is even more significant. "
Bank of America attributed the decline in retail sales in July to a change in the "Golden Day" (Prime Day), which took place at the end of June, rather than mid-July, a few years before the outbreak. In addition, spending on services has slowed, and this category is not enough to offset the decline in spending on goods.
Craig Erlam, an analyst at Oanda, believes that the fate of gold has not improved significantly, and unless subsequent economic data continue to perform poorly, it will be difficult for gold to break above $1800 an ounce.
If U. S. retail sales data show a bigger decline, gold has a chance to rise again, said Bart Melek, head of global strategy at TD Securities.
