Gasps of surprise! Gold retraced below 1840 to rest, waiting for the Fed meeting to gain a foothold.

Huang Gold Price (1842.03,  -0.57 ,  -0.03% The price retreated below $1840 and rested. The current gold price is $1839.27, while the silver price is $24.44. US economic data was mixed, with initial jobless claims unexpectedly rising and existing home sales in December falling 4.6%, exceeding analysts' expectations. The dollar rose slightly, while crude oil fell from its more than seven-year high.

　　The US Department of Labor said Thursday that initial jobless claims rose by 55,000 last week to 286,000, marking a third consecutive week of increases and exceeding the previous week's revised 230,000. The latest labor market data did not meet expectations. According to analysts' consensus forecast, initial jobless claims were expected to stabilize around 227,000.

　　Data released later by the National Association of Realtors (NAR) showed that existing home sales fell 4.6% month-over-month in December to a seasonally adjusted annual rate of 6.18 million. However, sales for the year rose to 6.12 million, with house prices recording their biggest increase since 1999. Despite 2021 being the strongest year since 2006, a decline in the number of homes for sale led to a drop in existing home sales in December, and the recent surge in mortgage rates could further slow home purchases. The decline in December sales was due to a decrease in the number of homes for sale and a faster rise in mortgage rates. Mortgage rates are now at their highest level since March 2020. The number of homes for sale last month hit a record low.

　　In terms of political and economic news, the US Senate Judiciary Committee passed the American Innovation and Choice Online Act by a vote of 16 to 6. This bill aims to curb the use of dominant market positions by large online technology companies to hinder the market share development of smaller technology companies.

　　US Treasury Secretary Janet Yellen said Thursday that if the COVID-19 pandemic is brought under control, she believes the Federal Reserve and the Biden administration will take the necessary steps to lower inflation in 2022. In a highly anticipated report on digital dollars released by the Federal Reserve on Thursday, it mentioned that a digital dollar could ensure the dollar remains the dominant currency in the international financial system, improve cross-border payments, enhance financial inclusion, and facilitate the use of the dollar in new technologies.

　　Precious Metals Market:

　　Adam Koos, president of Libertas Wealth Management Group, mentioned that "Gold has finally gained a foothold, mainly due to the inflationary environment we are in and the recent weakness of the dollar. While rising Treasury yields will certainly continue to suppress price gains, this does not change the fact that relative strength has increased significantly, to levels not seen since the price surge in late spring 2021." He believes the biggest question now is whether gold can maintain and set new highs, especially if the US cannot figure out how to solve the supply chain problems caused by the COVID-19 pandemic.

　　Koos went on to say that the sharp rise in palladium prices this week is encouraging, not only for palladium bulls, but also because it suggests that bottlenecks in the global automotive market supply chain may be starting to ease. Judging by the price trend of palladium, the market is expected to see deflation in automobiles this year.

　　Jim Wyckoff, senior analyst at Kitco, said: "Increased inflation concerns have prompted traders and investors to react, one of which is to buy hard assets as an inflation hedge, including gold and Silver (24.51,  -0.21 ,  -0.84% )。”

　　Marios Hadjikyriacos, senior investment analyst at XM, wrote in his report: "Gold broke through $1830 yesterday, hitting a two-month high, taking advantage of the slight pullback in real interest rates and the dollar. This is a call for a market that wants to go higher, as gold has hardly been affected by the surge in yields this week."

　　The Federal Reserve will hold its FOMC meeting on January 25-26, which is expected to pave the way for a series of interest rate hikes. Analysts believe this could ultimately severely impact gold's long-term outlook. Kitco's Wyckoff added that Thursday's US economic reports had little impact on metals.

　　Dollar Market:

　　The latest US data release was mixed, initially causing the dollar to fall, but as the results of the US 10-year Treasury note auction showed weak market demand and pushed yields higher, the dollar also rebounded. Joe Manimbo, senior market analyst at Western Union Business Solutions, said: "The dollar continues to be supported by next week's Fed meeting. Although it has fluctuated this month, the fundamentals remain favorable for the dollar, as the market expects the Fed to adopt a more hawkish policy stance."

　　The possibility of the Federal Reserve tightening monetary policy earlier has spurred a rise in US 10-year Treasury yields. The federal funds futures market has fully priced in a March rate hike, and there is a possibility of four rate hikes in total in 2022. The US 10-year Treasury yield was 1.8325% on Thursday, still below Wednesday's two-year high of 1.902%. Manimbo also added: "Many currencies are only trading in ranges, waiting for next week's central bank meetings."

　　The yen fell to 114.14 per dollar. The euro fell to $1.1313 from an earlier high of $1.1369. Supported by rate hike expectations, the pound continued to rise, up 0.03% to $1.3615, and even reached a 23-month high against the euro.

　　The currency market currently predicts that the Bank of England (BOE) will raise interest rates by more than 100 basis points (four quarter points) this year, with an 87% probability of a 25 basis point rate hike in February. Analysts at Commerzbank said: "If there is any surprise, it is probably that the Bank of England may take less decisive action at the February meeting, disappointing the market. Speculation on interest rates may provide further support, but the risk of profit-taking is also rising."

　　The Australian dollar rose 0.4% to $0.7241, continuing its rise from the previous day, but the Canadian dollar fell, closing at 1.2474 Canadian dollars per US dollar. The Norwegian krone fell 0.16% as the Norges Bank decided to keep its benchmark interest rate unchanged at 0.5%, only stating that it still expects to raise rates in March.

　　Crude Oil Market:

　　Crude oil futures fell slightly on Thursday after a report showed an unexpected increase in US crude oil supplies last week, falling from their highest level since 2014, but geopolitical risks to global supply helped limit price losses.

　　Following the release of the report by the Energy Information Administration (EIA), Phil Flynn, senior market analyst at Price Futures Group, pointed out that although crude oil supplies increased unexpectedly, the increase was less than the amount reported by the American Petroleum Institute (API) on Wednesday evening, and the data was also strengthened by the release of strategic petroleum reserves (SPR). According to EIA data, SPR inventories fell slightly by 1.4 million barrels.

　　Due to the Martin Luther King Jr. Day holiday at the beginning of the week, the EIA's report was delayed by one day to Thursday. Last week, US crude oil inventories increased by 500,000 barrels as of January 14. According to a survey by S&P Global Platts, analysts had on average expected a decrease of 700,000 barrels in US crude oil inventories for the week ending January 14. The API reported on Wednesday that crude oil inventories increased by 1.4 million barrels last week.

　　Matt Smith, principal oil analyst for the Americas at Kpler, pointed out that this increase in inventories followed seven consecutive weeks of decline and came at a time when refinery operating rates fell to their lowest level since mid-November.

　　Morgan Stanley expects Brent crude to reach $100 per barrel later in 2022. In a research report, Morgan Stanley noted that after a significant decline in crude oil inventories last year, further declines are expected by the end of this year. Spare capacity will fall from the current 3.4 million barrels per day to 2 million barrels per day. Investment in increasing oil production capacity is expected to shrink by 30% by the end of this decade as green initiatives progress. Given the resilience of the oil market, Morgan Stanley has adjusted its oil price forecast, which could trigger a demand decline, from $90 to $100 per barrel.

　　Michael Hewson, chief market analyst at CMC Markets UK, said that overall, oil prices continue to show an upward trend, and the momentum towards $100 per barrel is growing in the coming weeks. He stated, "With the recent lifting of COVID-19 restrictions in the UK, demand will continue to increase as we move into spring, and supply chain constraints are limiting downside."