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market analysis
The US government "shutdown" crisis is just a pause! Gold’s safe-haven charm remains intact
Wonderful introduction:
Optimism is the line of egrets that go straight up to the sky, optimism is the thousands of white sails on the side of the sunken boat, optimism is the luxuriant grass blowing in the wind at the head of Parrot Island, optimism is the little bits of falling red that turn into spring mud to protect the flowers.
Hello everyone, today XM Forex will bring you "[XM Forex]: The US government "shutdown" crisis is just a pause! The safe-haven charm of gold remains undiminished." Hope this helps you! The original content is as follows:
In the first half of the European session on Thursday (November 13), spot gold continued its upward trend for the third consecutive trading day and climbed to a three-week high. Investors generally believe that due to the long-term shutdown of the U.S. government, delayed U.S. macroeconomic data will show signs of economic weakness, which will prompt the Federal Reserve to further reduce borrowing costs in December. This expectation further provides rising momentum for gold, which has a non-yielding attribute.
In addition, the current accelerated downward trend of the US dollar index has also become another important factor supporting the price of gold.
The optimism brought about by the positive development of the U.S. federal government's restart does not seem to have an impact on gold bulls - although the government's restart usually supports market risk appetite, and rising risk appetite tends to put pressure on gold with safe-haven properties, the government's restart optimism is limited, and the risk of potential shutdowns still exists.
The U.S. government may shut down again, highlighting fiscal and economic concerns
The U.S. Senate passed an appropriation bill to end the longest government shutdown in history. This news boosted investor confidence and generally supported market risk appetite.
However, if we look closely at the details of the government restart, we can find that the dispute over the extension of medical insurance subsidies is the main disagreement between the two parties. This disagreement has not been resolved. According to convention, Congress needs to pass 12 appropriation budgets every year. The bill passed by the Senate on the evening of the 10th only contains 3 annual appropriation budgets, which means that 9 annual budgets have not yet been finalized. That is, in more than two months, the US federal government may once again face a "shutdown" crisis.
After the U.S. government restarted, market attention turned back to the deteriorating fiscal outlook and concerns about weakening economic momentum. Economists predict that the U.S. governmentThis long-term government shutdown may have caused quarterly GDP growth to fall by about 1.5% to 2.0%.
This expectation, in turn, continues to put pressure on U.S. dollar bulls.
The job market is showing signs of deterioration, and signs of economic weakness are strengthening
In addition, data released by labor analysis xmxyly.company RevelioLabs last week showed that the United States lost 9,100 jobs in October, and the number of government jobs decreased by 22,200 last month.
What is more noteworthy is that the Federal Reserve Bank of Chicago estimated that the U.S. unemployment rate rose slightly last month, which suggests that the labor market has shown signs of deterioration.
The Federal Reserve may lack basis for cutting interest rates, and the probability of interest rate cuts has declined
Although Fed Governor Stephen Millan has clearly reiterated that the need to reduce borrowing costs to offset the weakness in the labor market still exists, San Francisco Fed President Daley said that insufficient labor supply may support a steady rate cut. At the same time, Atlanta Fed President Rafael Bostic said on Wednesday that real-time indicators show that the job market is in a special state of equilibrium, and he believes that a severe decline in the job market in the short term is not the most likely outcome.
Bostic further added that there are currently few signs that price pressures will heat up again, so lowering policy interest rates will not fuel inflationary momentum. If medium- and long-term inflation expectations continue to trend upward, it may trigger systemic risks.
However, the White House’s latest statement has raised concerns that even if the government reopens, October consumer price index and employment data may be permanently missing.
The lack of key economic data will xmxyly.complicate the Fed's monetary policy management, and the decision-makers will be trapped in the dilemma of lack of reference basis.
Affected by this, CMEFedWatch interest rate futures showed that the probability of an interest rate cut fell back to 51%
This expectation is regarded as an important resistance to suppressing the trend of the US dollar, and provided some support for gold with no yield attributes during the European session on Thursday.
Follow-up focus on FOMC members’ speeches
Although the differences within the Fed xmxyly.committee have not yet been resolved, the market has begun to recalibrate expectations for the Fed’s easing policy in December.
Atlanta Fed President Raphael Bostic warned that if medium- and long-term inflation expectations continue to trend upward, systemic risks may arise.
Traders will continue to pay close attention to the speeches of many influential FOMC members to look for more clues on the path of future interest rate cuts by the Federal Reserve. The Fed's policy outlook, in turn, will become a key factor affecting the demand for U.S. dollars.
Technical analysis:
After gold price broke through the middle track of the ascending channel on Wednesday, it stopped before the key price of 4239.26. It is currently suppressed by this price and the upper track of the ascending channel.
The current pressure level is the upper track of the ascending channel and 4239.26, and the support level is 4157.96 and the 5-day line after the middle track of the channel.
The follow-up point of gold price is whether it can digest the early ETF hold-up, then consolidate, and go out of the fifth wave of new highs, or whether it becomes a second high and then gold prices fall to form a bullish pattern.
The above content is all about "[XM Foreign Exchange]: The US government "shutdown" crisis is just a pause! The charm of gold as a safe haven has not diminished". It was carefully xmxyly.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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