Original title: International gold prices are supported by the weak US index, but this outlook is bound to a long-term decline in gold prices
On Friday (10/22), international gold prices rose, and the weekly trend is expected to continue to rise again, supported by the weakening US dollar index and US bond yields. Markets anticipate that other major central banks may begin to reduce their stimulus policies, weakening the dollar's comparative advantage.
At 16:41 Beijing time, spot gold rose 0.49% to $1791.57 per ounce; the main COMEX futures contract rose 0.57% to $1792.0 per ounce; and the US dollar index fell 0.14% to 93.618.
The price of gold is expected to record an increase for the second week in a row, benefiting from the weakening US dollar.
Sources said that the Bank of Japan is discussing phasing out the COVID-19 loan plan as the number of infected people in the country continues to decline, which may make the central bank prepare to exit the crisis policy model sooner than investors expected.
Jeffrey Halley, Asia Pacific Market Analyst at OANDA, said, “Although the low price of gold continues to rise and it looks like they are ready to test $1,800 again, it may be difficult to maintain momentum above $1,800. When gold recently showed a strong rise, most of the capital flow seemed to be dominated by fast money seeking momentum. Unfortunately for gold, these funds will run away as soon as there is a sign of trouble.”
Federal Reserve Governor Waller said on Thursday that the Federal Reserve should reduce the size of its balance sheet in the next few years. The current size is as high as 8 trillion US dollars. “There is no reason to keep the balance sheet on such a large scale, so why not let it naturally shrink as securities expire... let the size of the balance sheet shrink, so if it needs to expand in the future, there will be more room.”
Atlanta Federal Reserve Chairman Bostic said supply chain disruptions and labor market restrictions, combined with strong consumer demand, may keep the inflation rate high after entering 2022. The Federal Reserve should raise interest rates before the end of next year.
The Federal Reserve is expected to begin withdrawing its support for the economy next month, announcing a reduction in its asset purchase program of 120 billion US dollars per month. Federal Reserve Chairman Powell has stated that he expects that by mid-2022, the Federal Reserve will not add additional policy incentives.
Hitesh Jain, chief analyst at Mumbai-based Yes Securities, said, “Given strong household consumption and strong corporate profits, the global economy will be very stable. In this context, I don't think gold will perform well in the long term.”
This year, consumer spending on durable goods in the US was much higher than the trend level by 25%, butUBSChief economist Paul Donovan said in a report to clients that this consumer boom will not continue, and demand may fall below normal levels in 2022. This will slow GDP growth and cool down inflation.