The difference contract is a complex trading tool, and it is risk of rapid losses due to leverage.

You should consider whether to understand how the difference contract operates, and whether you have the ability to bear the high risk of losing funds.

The difference contract is a complex trading tool, and it is risk of rapid losses due to leverage.

You should consider whether to understand how the difference contract operates, and whether you have the ability to bear the high risk of losing funds.

The difference contract is a complex trading tool, and it is risk of rapid losses due to leverage.

You should consider whether to understand how the difference contract operates, and whether you have the ability to bear the high risk of losing funds.

News & Analysis

Macro Analysis

Gold prices fluctuate and climbCarolane de Palmas

2023-07-17 17:27

Gold prices fluctuate and climb
That week, gold prices fluctuated and climbed, standing at $1950. This week, the US CPI and PPI fell, leading to a cooling expectation of the Federal Reserve's interest rate hike and support for gold prices. Next week, investors will focus on China's second quarter gross domestic product (GDP), as well as UK CPI and PPI data. At the same time, the meeting of G20 finance ministers and central bank governors is also worth paying attention to. Next, let's take a look at the factors that affect the trend of gold prices this week.
Data shows a decline in US inflation, supporting a rise in gold prices
This week, the highly anticipated Consumer price index (CPI) of the United States rose slightly in June, with a year-on-year increase of 3.0% hitting the minimum in more than two years, indicating that inflation has further subsided, and the core CPI also recorded the smallest month on month increase since August 2021. The Producer Price Index (PPI) of the United States in June showed almost no increase, with the smallest year-on-year increase in nearly three years, further proving that the US economy has entered a period of de inflation.
On July 12, the data released by the United States Department of Labor showed that the CPI of the United States rose 3% year-on-year in June, the smallest year-on-year increase in more than two years. In June, the core CPI increased by 4.8% year-on-year, setting the lowest level since October 2021.
The year-on-year growth rate of PPI in the United States in June slowed to 0.1% from 1.1% last month, and the low expected 0.4% hit a new low since August 2020; The month on month increase was 0.1%, lower than the expected 0.2%. In June, the core PPI increased by 2.4% year-on-year, lower than the expected 2.6%, reaching the lowest level since February 2021.
Economists from the Oxford Institute of Economics wrote in a report that the PPI increase in June was lower than expected, and the data for the first two months was also lowered. In addition to the CPI data released yesterday, these reports further support our view that the Federal Reserve will raise interest rates for the last time in this tightening cycle in July.
Christopher Wong, foreign exchange analyst of OCBC Bank, said that the sharp slowdown of US CPI is in line with our view that there will be a change in the trading strategy, that is, from a higher and longer rise in interest rates to a looming end, and may soon become a trading model of more interest rate cuts in 2024.
Richmond Federal Reserve Chairman Barkin stated after the release of CPI data that the inflation rate is still too high, and the Federal Reserve's target is 2%. If the retreat is too fast, inflation will strengthen again, and the Federal Reserve will need to do even more at that time.
Similarly, former New York Fed Chairman William Dudley also stated that the latest data raises a question: will July be the last interest rate hike? He would prefer to see a slowdown in non agricultural data and wage growth. If the labor market is too tight, it will be difficult for the inflation rate to fall back to 2%.
The slowdown in US economic growth and the expected cooling of Fed interest rate hikes support a rise in gold prices
On July 13th Beijing time, the Federal Reserve released its fifth national economic survey report (commonly known as the "Brown Book") for the year. The brown book shows that since late May, the overall economic activity of the surveyed areas has slightly increased, with 5 regions reporting mild or moderate economic growth and 5 regions reporting no changes