In the early Asian market of Friday, June 28, spot gold oscillated narrowly and is currently trading near $2327.31/oz. On Thursday, gold rose more than 1% (or about $30) from the previous trading day's two-week low to close at $2327.33/oz due to a weakening US dollar and market focus on key US inflation data to find clues about the path of the Federal Reserve's policy. Regarding the product structure, the operating income of products with 10-30 billion yuan was 401/1288/60 million yuan, respectively.

Phillip Streible, Chief Market Strategist at Blue Line Futures, said: "Some of the released data supports the gold market. Wholesale inventories are lower than expected, and final GDP is very low. Therefore, gold futures are boosted by the decline of the US dollar index."

The data released on Thursday highlighted the weakening of economic momentum, with a decline in May's business equipment expenditure and a widening trade deficit in goods due to declining exports. The US Department of Commerce's Bureau of Economic Analysis released its third estimate of first-quarter GDP, confirming a significant slowdown in economic growth in the first quarter.Thursday's data highlighted a weakening economic momentum, with equipment spending by companies falling in May and exports declining, leading to an expansion of the trade deficit in goods. The U.S. Department of Commerce's Bureau of Economic Analysis released the third estimate of GDP for the first quarter, confirming a sharp slowdown in economic growth in the first quarter.

The US dollar fell 0.33% to 105.92 in intraday trading on Thursday, and the 10-year Treasury yield fell to 4.289%, boosting the attractiveness of gold to investors holding other currencies.

According to FedWatch data from the London Stock Exchange Group (LSEG), investors largely hold the view that despite the Federal Reserve's expected interest rate cut only once this year, they insist on two interest rate cuts.

Personal consumption expenditure (PCE) price index data will be released on Friday, which is a key inflation report and a favorite inflation indicator of the Federal Reserve.

As the yen hovers around a 38-year low, the market is also alert to signs of Japanese intervention. Uncertainty in the economy often increases the attraction of gold.

(Spot gold daily chart, source: E-Huitong)

US continued claims for unemployment benefits surged and business equipment spending fell, suggesting a weakening of economic momentum.

Initial claims for state unemployment benefits in the US fell last week, but continued claims for unemployment benefits in mid-June rose to their highest level in two and a half years, suggesting that the labor market is loosening in the face of slowing economic growth.

Other data released on Thursday highlighted the weakening of economic momentum, with a decline in May's business equipment expenditure and a widening trade deficit in goods due to declining exports. Following a significant slowdown in economic growth in the first quarter, a series of weak data increased the possibility of a rate cut by the Federal Reserve in September.

May's retail sales were tepid, and inflationary pressure has clearly weakened. Economists do not believe that these data indicate that the economy is about to enter a recession.

Sal Guatieri, senior economist at BMO Capital Markets, said: "The US economy is on a soft landing trajectory, which is exactly what the Federal Reserve wants to see."

The US Department of Labor said that for the week ended June 22, initial claims for state unemployment benefits fell by 6,000 to 233,000 after seasonal adjustments. The above data include the June festival on Wednesday last week, which is a new public holiday.

The number of people claiming unemployment benefits often fluctuates before and after public holidays. This kind of volatility is expected to continue in the coming weeks. Auto manufacturers usually shut down factories after Independence Day on July 4 for annual maintenance.

Initial claims for unemployment benefits have risen to the high end of the range of 194,000-243,000 this year.Economists have different opinions on whether the recent increase in claimants indicates an increase in layoffs or a repeat of last year's fluctuations.

The increase in claimants is also attributed to a policy adjustment in Minnesota, which allows non-teaching education personnel to claim unemployment benefits during the summer vacation.

In another report released by the US government on Thursday, the Department of Commerce confirmed a significant slowdown in economic growth in the first quarter. The Bureau of Economic Analysis of the Department of Commerce released its third estimate of first-quarter GDP, and the quarterly GDP growth rate was slightly revised up to 1.4%. The previous quarterly GDP growth rate was 1.3%, and economic growth in the fourth quarter of last year was 3.4%. Although the second-quarter growth rate may accelerate, it is unlikely to exceed 1.8%, a growth rate that Federal Reserve officials believe will not accelerate inflation.

The upward revision in the quarterly GDP growth rate for the first quarter reflects upward revisions in business and government spending and downward revisions in imports. These factors outweighed the impact of downward revisions in consumer spending.

According to the unemployment benefit report, as of the week ending June 15th, the number of continued unemployment benefit claimants increased by 18,000 people and reached 1.839 million people after seasonal adjustment, the highest level since the end of November 2021. The continued unemployment benefit data above was collected during the government survey of households on June's unemployment rate. The number of continued unemployment benefit claimants increased between the survey weeks in May and June. The May unemployment rate rose to 4.0%, the first time since January 2022. However, most economists do not believe that the current level of unemployment rate will pose a danger to the labor market. They believe that the increase in the unemployment rate is mainly concentrated in the age group of 35-44 years old, new immigrants, and certain industries.Economists warn not to over-interpret this growth and point out that the upward trend in the number of Minnesota claimants is likely to fade when the new school year starts.

The above continued unemployment benefit data is within the survey period of the government's survey on June's unemployment rate for households.

The continued unemployment benefit claimants increased between the survey weeks in May and June. The May unemployment rate rose to 4.0%, the first time since January 2022. However, most economists do not believe that the current level of unemployment rate will pose a danger to the labor market. They believe that the increase in the unemployment rate is mainly concentrated in the age group of 35-44 years old, new immigrants, and certain industries.

A report from the US Commerce Department's Bureau of Statistics shows that non-defense capital goods orders excluding aircraft fell by 0.6% in May. Economists previously expected them to increase by 0.1%, and they grew by 0.3% in April.

Fed's Bostic said that inflation is heading in the right direction and expects one rate cut in the fourth quarter.

Atlanta Fed President Bostic said in a policy article published Thursday that US inflation "appears to be slowing," which should allow the Fed to cut interest rates later this year.

Bostic said that after concerns that inflation might remain stuck at high levels, recent data has shown new progress, including the proportion of goods and services with price increases of more than 5% has fallen to below 20%, which is closer to the level before the COVID-19 pandemic and is similar to the proportion during last year's rapid inflation slowdown.

Bostic said, "Inflation is moving in the right direction." He regards the above indicators as one of the testing standards for the Fed to fight inflation that soared to a 40-year high in 2022.

May's personal consumption expenditure (PCE) inflation data will be released on Friday.

Bostic said that from the current situation, "I still think it is possible to cut the federal funds rate once in the fourth quarter of this year." In subsequent comments to reporters, he said that one reason for maintaining "patience" with the first rate cut is that it needs to be clear that the inflation rate is falling towards the target of 2%, and It can be seen as the first of a series of rate cuts.

Investors expect rate cuts to start in September and there will be two 25 basis point rate cuts by the end of this year, while Bostic and many other Fed policymakers now anticipate just one rate cut.

"I haven't locked in any specific policy path," Bostic said. "In some seemingly reasonable situations, more rate cuts, no cuts, or even rate hikes may be appropriate. I will be guided by data and actual conditions."

He said recent employment and economic growth data indicates that "economic activity will gradually slow down, thus restoring the balance between supply and demand in the economy... this is really Economics 101."

He said at a news conference held after the publication of the article that enterprises in his southeastern region still regard inflation as their "main concern", and most enterprises believe that the current recruitment and employment levels are sustainable.

Bostic said he felt that the labor market would not experience a "cliff" in the future, and he believed that the Fed could achieve its inflation target in the context of "labor markets... which is still tense by historical standards."(end)

Weak US economic data drags down the US dollar

The US dollar fell against most currencies on Thursday, dragged down by soft US economic data, which supported expectations that the Fed will begin cutting interest rates later this year.

Monex USA Forex trader Helen Given said: "Compared to other aspects, the market seems to be more concerned about the unexpected data of personal consumption expenditure, which is definitely a sign of the US economic slowdown. The lower-than-expected first-quarter GDP is expected, but the downward revision of personal consumption expenditure data indicates that there may be further slowdowns."

Given that the yen continues to weaken, the market needs to beware of the possibility of Japan intervening in the market again. Analysts said that although the risk of intervention has increased, Japanese authorities may wait until after the release of the US personal consumption expenditure (PCE) price index on Friday before intervening again. They believe that the effectiveness of any intervention measures may be limited.

Forex senior analyst Michael Boutros said, "It is well known that the Bank of Japan likes to take action on Fridays, but its best scenario would be... the sharp slowdown of U.S. inflation, which further supports the call for a rate cut by the Fed this year."

Federal Reserve board member Bowman: Not ready to support rate cuts until inflation slows significantly.

Michelle Bowman, a member of the Federal Reserve, reiterated on Thursday that she is not ready to support rate cuts as long as inflation pressures remain high.

Bowman said in a prepared speech for the 2024 annual meeting of the Idaho, Nevada, Oregon and Washington Bankers Associations that the Fed's current stance on interest rates is still "restrictive" and that even if monetary policy remains at its current level, price pressure should cool.

"If future data indicates that inflation is persistently moving toward our 2 percent target, then gradually lowering the federal funds rate will be appropriate to prevent monetary policy from becoming excessively restrictive," Bowman said. "We are not yet at a position where it is appropriate to lower policy rates, and I still see some upward risks to inflation."

Bowman also said, "If future data indicates that inflation progress has stalled or reversed, I would still be willing to raise the federal funds rate target range at future meetings."

This is consistent with her recent comments on economic and policy prospects. At present, Fed officials are looking for evidence that inflation pressures are steadily returning to their 2 percent target. Decision-makers are expected to cut interest rates once this year by 25 basis points, and many market participants believe this will happen at the Federal Open Market Committee (FOMC) meeting in September.

Bowman said earlier this week that she does not believe interest rates will be cut this year and that policy may be relaxed next year.

Bowman said on Thursday that overall economic activity has been strong this year, but has slowed down and progress on inflation has stalled. She noted that relaxed financial conditions are presenting challenges for future price directions.

"Another risk is that since the end of last year, the relaxation of financial conditions (reflected in a significant increase in stock valuations) and additional fiscal stimulus measures may further increase demand momentum, hindering any further progress and even leading to a resumption of inflation," Bowman said.

Bowman also said that the decreasing number of banks in the United States is a problem. At the same time, there are not enough new banks being established.

"In the long run, the lack of newly established banks will create a gap in the banking system, which may lead to a decrease in the reliable and reasonably priced credit supply, a lack of financial services in underserved markets and the continued migration of bank activity outside the banking system," she said.

Market outlook

After a sharp rebound in overnight gold prices, the uncertainty of the future trend has greatly increased. From the perspective of the four-hour level, the Bollinger Bands are close to running horizontally after closing, given the breakthrough in the 2295.30-2342.01 range.

(Spot gold 4-hour chart, source: Yi Hui Tong)

At 08:00 Beijing time, spot gold was trading at $2,327.51 an ounce.