Affected by yesterday's US PPI and geopolitical factors, today it once again approached its previous high. $Gold Futures(DEC4) (GCmain.US)$ Netherlands International Group's commodity strategist Ewa Manthey said that gold prices will reach their peak in the fourth quarter, as investors are concerned about the Fed's interest rate cuts, and inflows of ETF funds and central bank purchases will continue to support gold prices.
Market expectations of a Fed rate cut in September. The first of two major US inflation reports this week was released yesterday. US July PPI slowed significantly, rising 2.2% year-on-year, below expectations of 2.3% and the previous 2.6%, with a month-on-month increase of 0.1%, lower than the previous and expected 0.2%. Analysts said that the PPI data further indicates that inflation has reversed, and the expectation of a Fed interest rate cut is rising. According to CME's "Fed Watch": The probability of a 25 basis point rate cut by the Fed in September is 46%, and the probability of a 50 basis point rate cut is 54%. The probability of a cumulative 50 basis point rate cut by the Fed by November is 29.6%, and the probability of a cumulative 75 basis point rate cut is 51.2%, with the probability of a cumulative 100 basis point rate cut at 19.2%.
Geopolitical risks continue to ferment.
Ewa Manthey believes that since July last year, the Fed has kept its key policy interest rate within the target range of 5.25% to 5.5%, which is the highest level in more than 20 years. Economists now expect the Fed to cut interest rates by 50 basis points in September, followed by a series of 25 basis point cuts, which will bring the federal funds rate back to around 3.5% in the summer of next year.
In the Middle East, at the end of July, important Hamas leaders and Hezbollah's No. 2 figure died one after another, and the situation in the Middle East escalated rapidly. People are increasingly worried that Iran may launch retaliatory attacks at any time. According to the latest statements by three senior Iranian officials, the only way to prevent Iran from launching direct retaliatory attacks against Israel is to reach a ceasefire agreement in Gaza at the meeting that is expected to be held this week. One of the senior Iranian security officials said that if the Gaza talks fail or Iran believes that Israel is delaying negotiations, Iran will launch direct attacks along with allies like Hezbollah.
According to Evercore ISI analysts, the Fed will now prioritize the labor market, with the upcoming release of the US Consumer Price Index playing a secondary role in the decision-making process. The bank emphasized that even if inflation is higher than expected, the Fed may still focus on preventing the deterioration of the labor market. In other words, the probability of an interest rate cut in September is high.
Ewa Manthey believes that since July last year, the Fed has kept its key policy interest rate within the target range of 5.25% to 5.5%, which is the highest level in more than 20 years. Economists now expect the Fed to cut interest rates by 50 basis points in September, followed by a series of 25 basis point cuts, which will bring the federal funds rate back to around 3.5% in the summer of next year.
In addition, global gold ETFs saw net inflows for the third consecutive month in July. There was a net inflow of US$3.7 billion into physical gold ETFs worldwide that month, the strongest monthly performance since April 2022, with Western markets having the largest inflows. The trend of net outflows from gold ETFs in early 2024 has narrowed to US$3 billion. Thanks to fund inflows and rising gold prices, assets under management (AUM) grew by 6% to reach US$246 billion.
According to Ewa Manthey, "Against the current economic environment, geopolitical risks and backdrop of gold's top reversal, we expect central bank demand to remain robust."
Global central bank net gold purchases in June were 12 tons, and the trend of gold purchases is still ongoing.
Gold ETFs have been one of the investment themes this year. As of the US Eastern Time on August 13th, mainstream gold ETFs have risen more than 19% this year, leading the csi commodity equity index, which has risen by 13.93%.
In the fourth quarter, gold prices will reach their peak due to investors' concerns about the Fed's interest rate cuts, and inflows of ETF funds and central bank purchases will continue to support gold prices.
US July CPI will be released tonight, but Evercore ISI analysts said that the Fed will now prioritize the labor market, and the forthcoming US Consumer Price Index will play a secondary role in the decision-making process. The trend of net outflows from gold ETFs in early 2024 has narrowed to US$3 billion. Thanks to fund inflows and rising gold prices, assets under management (AUM) grew by 6% to reach US$246 billion.
Netherlands International Group's commodity strategist Ewa Manthey said that gold prices will reach their peak in the fourth quarter, as investors are concerned about the Fed's interest rate cuts, and inflows of ETF funds and central bank purchases will continue to support gold prices.
Affected by yesterday's US PPI and geopolitical factors, today it once again approached its previous high.
How to seize the opportunity of rising gold prices? As gold ETF trading is convenient, liquid, and available for online trading during the trading session, investors can capture the opportunity of rising gold prices by investing in ETFs.
In fact, gold ETFs are one of this year's investment themes. From the perspective of the cumulative gains and losses from the beginning of the year to the close of July 29th, mainstream gold ETFs have risen by more than 15%, leading the 14.54% increase in the $gold main contract (2412) (GCmain.US)$.
In the Middle East, at the end of July, important Hamas leaders and Hezbollah's No. 2 figure died one after another, and the situation in the Middle East escalated rapidly. People are increasingly worried that Iran may launch retaliatory attacks at any time. According to the latest statements by three senior Iranian officials, the only way to prevent Iran from launching direct retaliatory attacks against Israel is to reach a ceasefire agreement in Gaza at the meeting that is expected to be held this week. One of the senior Iranian security officials said that if the Gaza talks fail or Iran believes that Israel is delaying negotiations, Iran will launch direct attacks along with allies like Hezbollah. $SPDR Gold ETF (GLD.US)$Please use your Futubull account to access the feature.$Gold Trust Ishares (IAU.US)$ Global central bank net gold purchases in June were 12 tons, and the trend of gold purchases is still ongoing. $S&P 500 Index (.SPX.US)$ Gold ETFs have been one of the investment themes this year. As of the US Eastern Time on August 13th, mainstream gold ETFs have risen more than 19% this year, leading the csi commodity equity index, which has risen by 13.93%.
Editor/Jeffy
