24K99 News On Wednesday (May 22), according to the minutes of the Federal Open Market Committee meeting, although US monetary policy has become a secondary factor in the gold market, continued inflation may cause further selling pressure because it may force the Federal Reserve to raise interest rates again. Investors have made profits, gold gains have cooled down, and traders have withdrawn their bets on the Federal Reserve cutting interest rates this year.
Spot gold closed down 1.74% to close at $2378.57 per ounce; COMEX gold futures closed down 1.77% to close at $2382.3 per ounce; COMEX silver futures closed down 3.77% to close at $30.99 per ounce.
(Spot gold chart, source: FX168)
[Market News Analysis]
With the release of the minutes of the Federal Reserve meeting, the market's expectations for the Fed to cut interest rates continued to decline, causing the US dollar to receive some purchases, and the US dollar index rose, making gold more expensive for holders of other currencies.
Jim Wyckoff, senior analyst at Kitco Metals, said, “You'll see some week-long liquidations, and some short-term futures traders end in profit; this is not unusual in a market that has hit record highs.” “If the bulls need an immediate rebound, then tomorrow will be an important trading day, otherwise the charts may be damaged in the short term.”
According to the minutes of the Bank of America's April 30 to May 1 meeting, Federal Reserve officials said that it will take longer than previously anticipated to increase confidence in inflation rising to 2%.
Gold is also known as an inflation hedge, but the opportunity cost of holding this interest-free asset increases as interest rates rise.
Everett Millman, chief market analyst at Gainesville Coins, said that gold prices are still being held back by delayed interest rate cuts, unmet concerns about the recession, and sell-offs from Western investors.
Recently, economic data showed a downward trend in inflation, but Fed policymakers said that the Federal Reserve should wait a few more months to ensure that inflation actually returns to the target trajectory of 2% before cutting interest rates.
According to a report in the Wall Street Journal today, the rise in gold prices in the past few months was mainly due to purchases by central banks. The Wall Street Journal said that central banks around the world are beginning to further diversify away from dollar assets that are more susceptible to sanctions.
Steve Forbes, chairman and editor-in-chief of Forbes Media, said there are many signs that the world is transitioning to a new gold standard. He said, “It's hard to believe that the world is beginning to move towards a gold-based monetary system. Despite the fact that the historical gold standard has almost been widely flouted by economists and finance officials.”
He said that despite many myths and general ignorance surrounding the gold currency, it has worked well for a long time. “The US gold system existed for 180 years until the early 1970s.” “When the value of the dollar was pegged to gold, we never experienced inflation, and the US experienced the strongest long-term economic growth in human history.”
Analysts say investors have largely ignored the opportunity cost of holding gold when hedging against the ongoing threat of inflation and economic uncertainty.
Vladimir Zernov, an independent trader and analyst at XEmpire, said, “Gold is under pressure from traders taking back profits as they approach historic highs. If gold falls below the support of $2390 - $2,400 per ounce, it will move towards the next support level, which is support in the $2295-2305 per ounce range.”
According to Wind data, as of May 22, SHFE silver had increased by 39.13% during the year, at 8,343 yuan/kg. In the spot market, Bank of London now stands at 31 US dollars/ounce, an increase of more than 30% during the year, a record high since 2013. As the price of silver continues to rise, as the second-largest cost of photovoltaic cells after silicon wafers, the rising cost of silver paste has also brought challenges to the photovoltaic industry. The continuous rise in silver prices has made the photovoltaic industry's demand for “silver reduction” urgent. In this context, less silver and de-silvering are currently becoming an important direction for technology research and development in the photovoltaic industry. Various related “silver reduction” technology routes such as OBB (no main fence technology), silver coated copper, and electroplated copper are progressing at an accelerated pace, and are entering the mass production stage one after another.
[Focus on financial data and events on the next trading day (Beijing time)]
① To be determined G7 finance ministers hold a meeting with central bank governors
② 09:00 China's share of global payments in Swift RMB in April
③ 15:15 Preliminary French manufacturing PMI for May
④ 15:30 Preliminary German manufacturing PMI for May
⑤ 16:00 Eurozone's preliminary manufacturing PMI for May
⑥ 16:30 UK manufacturing PMI for May
⑦ 16:30 UK service sector PMI for May
⑧ Number of jobless claims in the US at 20:30 to the beginning of the week of May 18
⑨ The initial value of the US S&P global manufacturing PMI for May at 9:45
⑩ The preliminary value of the US S&P Global Services PMI for May at 21:45
⑪ 22:00 The total number of new home sales in the US in April was annualized
⑫ EIA natural gas inventory for the week from 22:30 US to May 17
⑬ At 03:00 the next day, the Federal Reserve Bostic participated in the Q&A session