24K99 News Spot gold remained volatile and consolidated this week. It opened at 2321.88 US dollars/ounce this week, hitting a high of 2339.79 US dollars/ounce, hitting a low of 2293.69 US dollars/ounce, and finally closing at 2326.72 US dollars/ounce. The trend of the US dollar continues to dominate the recent trend of gold. At the beginning of the week, it fell below the 2,300 support level under the heavy pressure of the strong dollar. Then, supported by US economic data strengthening interest rate cut expectations, the price of gold tried to rebound. Eventually, 2,326 US dollars, up 0.22% this week.
(Spot gold chart, source: FX168)
According to a new report by Georgette Boele, senior economist at ABN Amro Group (ABN Amro), the price of gold has lost momentum due to the divergence of drivers and the breakdown of traditional relationships, so investors should be cautious about this yellow metal.
However, Michele Schneider, chief strategist at MarketGauge.com, said, “Gold is on the sidelines, but risks are biased upward. Inflation will not go away, geopolitical tension will not ease, and government deficits are growing. This provides solid support for gold.”
Review of this week's highlights
At the end of the first debate in the US election, Trump bluntly stated that he had won a huge victory
Trump held his own rally in Virginia a few hours after the debate ended, and he called the debate a “huge victory.” “Joe Biden's problem isn't his age,” Trump, 78, said, “it's his ability. He's extremely poor.”
The former president said he didn't believe Biden would drop out of the campaign, saying that Biden “performed better than other Democrats in the polls,” including California Governor Gavin Newsom and Vice President Kamala Harris.
Although questions about Biden's age aren't new, his erratic performance on the debate stage — including language gaps, hoarse voices, and some difficult answers — has sparked panic among some Democrats, who have raised new questions.
Former Speaker of the House Nancy Pelosi said, “From a performance standpoint, this is not very good.” Other Democrats, such as Kate Bedingfield, Biden's former communications director, called it “a very disappointing demonstration of debate.”
A donor planning to attend the Biden fundraiser in the Hamptons on Saturday said, “This is a disaster, it's worse than I thought. Everyone I know thinks Biden should quit.”
Another long-time Democratic campaign advisor told CNBC less than 20 minutes after the debate: “The game is over.”
“The only thing that could have caused a bigger disaster was him falling off the stage. Big donors say... he must step down,” said a Democratic Party worker. “If Biden stays in office, we'll have to watch him walk a tightrope in the air until November.”
On Friday, the New York Times Editorial Board called on Biden to withdraw from the election campaign. It said Democrats should “acknowledge Biden's inability to continue running and create a process to choose someone more capable to replace him.”
On Thursday night, senior Democratic lawmakers, donors, and party insiders were uneasy because the president often stumbled during debates, was inconsistent in his responses, and sometimes seemed to have lost his mind.
According to CNN, 48 million television viewers watched the debate, and another 30 million streaming viewers watched the debate. The debate is seen as a key opportunity for Biden to reverse his faltering re-election campaign, which has been dragged down by concerns about his age and cost of living. He lags behind Trump in most national and swing state polls.
There is “no doubt” that the Federal Reserve will cut interest rates in September! Core PCE hits a new low in nearly three years
An important economic indicator released by the Federal Reserve on Friday showed that the inflation rate in May slowed to its lowest annual rate in more than three years, providing good news for US Federal Reserve officials seeking to start cutting interest rates in the next few months.
The US Department of Commerce report shows that after seasonal adjustments, the core personal consumption expenditure price index rose by only 0.1% in April, up 2.6% from the same period last year, and down 0.2 percentage points from April.
Both figures are in line with Dow Jones estimates. The annual rate in May hit its lowest level since March 2021. This is the first time in this economic cycle that inflation has surpassed the Federal Reserve's 2% target.
The overall inflation rate, which includes food and energy, remained flat during the month, rising 2.6% year over year. These numbers are also in line with expectations.
According to the CME FedWatch tool, traders currently expect the probability that the Fed will cut interest rates in September to be about 68%, which is higher than 64% before the inflation data was released.
Seema Shah, chief global strategist at Principal Asset Management, said: “It's a relief that today's PCE data is not surprising, and the Federal Reserve will welcome it. However, the policy path is uncertain. A further slowdown in inflation, preferably with more evidence of a weak labor market, will be necessary to cut interest rates for the first time in September.”
The Federal Reserve is targeting a 2% inflation rate and began raising interest rates in March 2022. The previous year, the Federal Reserve viewed price increases as a temporary impact of the COVID-19 pandemic, which may gradually subside. The last time the Federal Reserve raised interest rates was in July 2023, when the Federal Reserve raised the benchmark overnight borrowing level to a range of 5.25% to 5.50%, the highest level in 23 years.
Recent economic data shows that the US economy has withstood the test of the Federal Reserve's aggressive monetary tightening policy. According to the Federal Reserve Bank of Atlanta, GDP grew at an annualized rate of 1.4% in the first quarter and is expected to grow by 2.7% in the second quarter.
Recently, there have been some minor cracks in the labor market, and the number of people who continue to apply for unemployment benefits has reached the highest level since November 2021. However, the unemployment rate is still 4%, which is a low level according to the historical average, although the unemployment rate is slowly rising.
Next week's outlook
The latest Kitco News Golden Week survey shows that most industry experts plan to wait and see next week, while retail investors are divided on the short-term outlook for gold.
Twelve Wall Street analysts participated in the Kitco News gold survey this week, and the consensus is that caution is the greatest courage next week. Four experts said they expect the price of gold to rise next week, accounting for 33%, while 2 analysts or 17% predict a fall in price. The remaining 6 experts, accounting for exactly 50% of the total, are unwilling to believe the direction of gold in the coming week.
Meanwhile, Kitco's online poll received 178 votes. Main Street investors were divided on the short-term outlook for gold this week, similar to Wall Street's opinion last week. 86 retail traders, accounting for 48%, expect the price of gold to rise next week. Another 50 people, accounting for 28%, expected the price of gold to fall, while the remaining 42 respondents, accounting for 24%, believed that the price would continue to move sideways in the coming week.
(Image credit: Ktico)
US Independence Day will make next week's economic data unusual, and important releases will be compressed on both sides of the holiday. On Monday, the market will receive the ISM manufacturing purchasing managers' index, followed by Eurozone CPI preliminary values and JOLTS job vacancy data released on Tuesday. ECB President Christine Lagarde and Federal Reserve Chairman Jerome Powell will also speak at a central bank meeting in Portugal.
On Wednesday that follows, the market will focus on the ADP employment report, weekly unemployment benefits data and the ISM Services Purchasing Managers' Index, and the June FOMC meeting minutes.
After the July 4 holiday, US traders will wake up on Friday morning to the June non-farm payrolls report.
Barchart.Com's senior market analyst Darin Newsom remains optimistic about next week's gold price.
“I will continue to be bullish because the August contract looks like there is still room to continue its short-term upward trend,” he said. He said, “On Friday morning, the August contract broke through its previous four-day high of $2349.70 per ounce, and the next short-term upward target was $2370.40 per ounce. We need to remember that the contract's medium-term trend is still downward, and it appears to have formed triple bottoms of $2304.20 per ounce (week of June 3), $2304.50 per ounce (week of June 10), and $2304.70 per ounce (this week).”
“As the old saying goes, maybe just because I'm old and still remember, 'Triple Bottom Was Breaked',” Newsom warned.
Everett Millman, chief market analyst at Gainesville Coins, said he expects gold to continue to suffer from recent position patterns until something shakes the wider market.
“Many people now see gold as the opposite of a risky asset in the stock market, even though it's not a perfect one-on-one relationship,” he said. “I think this is the biggest driving factor now, especially when people are confusing the performance of the stock market. What we are seeing now is only the very top of the stock market. It is only the beginning of the trend. Of course, it is a bad direction for the big starting trend.” “It's not a perfect foundation, but we're still not far from a record high. Until the stock market experiences a sharp decline or correction, I think gold will continue to hang on.”