The US dollar index has undergone a significant adjustment, and the US May CPI may "explode"! Gold prices are showing increased volatility.
This week, the market will see interest rate decisions from the Federal Reserve, the European Central Bank, and the Bank of Japan, along with the release of key economic data such as the US May CPI and retail sales data. Some market participants have warned of a potential surge in the May CPI data, released one day before the FOMC decision, and the trend of overall inflation being lower than core inflation may continue. If the monthly rate of core inflation is higher than the market's widely expected 0.4%, it may further fuel market expectations of interest rate hikes. Last week, the US dollar index saw a significant adjustment, with a weekly decline of 0.48%, while precious metal prices rebounded, with CMX gold rising 0.58% and CMX silver rising 2.95%, leading to a significant weakening of the gold-silver ratio. The macro team at Melleria Futures Research pointed out that the US May ISM non-manufacturing PMI index, released last week, came in at 50.3, significantly lower than the market expectation of 52.4 and the previous value of 51.9, marking a near one-year low. This indicates that the US economy, hampered by high interest rates, is also beginning to be significantly affected in the service sector. At the same time, the unexpectedly high number of US weekly jobless claims released last Thursday further fueled market concerns about a recession, leading to a significant adjustment in the US dollar index and a rebound in precious metal prices. Meanwhile, according to the Commodity Futures Trading Commission (CFTC)'s data on changes in holdings, as of the week ending June 10, speculative net long positions in CMX gold futures increased by 6,312 contracts to 114,165 contracts, and the long-short holding strength ratio rebounded by 5.8% to 85.7%. Speculative net long positions in CMX silver futures increased slightly by 0.04 million contracts, and the long-short holding strength ratio fell by 1.37% to 40.3%. "This shows that there is a divergence in the judgment of speculative longs such as hedge funds on the future trend of precious metals gold and silver, mainly based on the long-term bullish view on gold due to the continued logic of US dollar credit, and a bearish view on silver due to the short-term economic suppression of interest rate hikes." the team analyzed. They pointed out that in the medium term, with the breaking of the US debt ceiling and the relaxed constraints on government spending plans, the de facto loose fiscal policy will inevitably affect the resilience of long-term inflation and weaken the effectiveness of the Federal Reserve's monetary policy. However, in the short term, the Federal Reserve has already raised interest rates to a very high level, and interest-sensitive sectors such as banking, real estate, and manufacturing have already been significantly damaged, making the Fed's room for further interest rate hikes relatively limited. In the team's view, the probability of the Federal Reserve pausing interest rate hikes at the June meeting is relatively high. This is partly because the contraction of US manufacturing in May further expanded, and the non-manufacturing PMI also unexpectedly contracted to near the boom-bust line. Based on the prediction of non-farm employment data such as the number of jobless claims, the gap in the US job market is accelerating. On the other hand, after the US debt ceiling was broken, the Treasury Department intensively issued Treasury bills and bonds to replenish cash in its general account, with an estimated incremental financing demand of up to US$300 billion per month, putting the market under short-term liquidity pressure. The Fed's monetary policy will provide financing conditions with marginal easing. "Therefore, we believe that before the resilience of medium- and long-term inflation is significantly manifested, the Federal Reserve's monetary policy will most likely wait and see for a while. US Treasury yields will face the dual effects of liquidity pressure and marginal policy easing in the short term, and are expected to mainly fluctuate, thus suppressing the upside potential of precious metal prices, and gold prices may continue to fluctuate at high levels." In the medium to long term, they believe that the US debt predicament will make it difficult for inflation to reach the policy target of 2% within 1-2 years, and it is expected to remain in the 3%-3.5% range. At the same time, the real interest rate calculated based on the current interest rate peak (5.08%) is between 1.65% and 2.1%, and it is predicted that gold priced in US dollars will fluctuate in the range of US$1900-2100 per ounce, and gold prices will fluctuate for a longer period near historical highs. When the US inflation problem is again revealed due to the expansion of the debt ceiling, gold may usher in another opportunity for a trend-based upward movement.
Time:
2023-06-12 10:22
This week, the market will see interest rate decisions from the Federal Reserve, the European Central Bank, and the Bank of Japan, while important economic data such as the US May CPI and retail sales data will also be released intensively. Some market participants have warned that the May CPI data, released one day earlier than the FOMC decision, risks a surge, and the trend of overall inflation being lower than core inflation may continue. If the monthly rate of core inflation is higher than the market's generally expected 0.4%, it may further fuel market expectations of interest rate hikes.
Last week, the US dollar index saw a significant adjustment, with a weekly decline of 0.48%, while precious metal prices rebounded, with CMX gold rising 0.58% and CMX silver rising 2.95%, and the gold-silver ratio weakening significantly.
The macro team of Meiliya Futures pointed out that the US May ISM non-manufacturing PMI index released last week came in at 50.3, significantly lower than the market expectation of 52.4 and the previous value of 51.9, the second lowest level in nearly a year, indicating that under the constraints of high interest rates, the service sector of the US economy is also beginning to be significantly affected. At the same time, the number of US weekly jobless claims released last Thursday significantly exceeded expectations, further exacerbating market concerns about a recession, which led to a significant adjustment in the US dollar index and a rebound in precious metal prices.
Meanwhile, according to the data on changes in holdings released by the US Commodity Futures Trading Commission (CFTC), as of the week ending June 10, speculative net long positions in CMX gold futures increased by 6,312 contracts to 114,165 contracts, and the long-short holding strength ratio rebounded by 5.8% to 85.7%, while speculative net long positions in CMX silver futures increased slightly by 0.04 million contracts, and the long-short holding strength ratio fell by 1.37% to 40.3%. "This shows that there are differences in the judgment of hedge funds and other speculative longs on the future trend of precious metals gold and silver, mainly based on the long-term bullish view on gold due to the continued logic of US dollar credit, and a bearish view on silver due to interest rate hikes suppressing the short-term economy." the team analyzed.
They pointed out that in the medium term, with the breaking of the US debt ceiling and the relaxed constraints on government spending plans, the de facto loose fiscal policy will inevitably affect the resilience of long-term inflation and weaken the effectiveness of the Federal Reserve's monetary policy. However, in the short term, the Federal Reserve has already raised interest rates to a very high level, and interest-sensitive sectors such as banks, real estate, and manufacturing have already suffered significantly, making the Fed's room for further interest rate hikes relatively limited.
In the view of the team, the probability of the Fed pausing interest rate hikes at the June meeting is relatively high. On the one hand, this is because the contraction of US manufacturing in May further expanded, and the non-manufacturing PMI also unexpectedly contracted to near the boom-bust line. At the same time, based on the prediction of non-farm employment data such as the number of jobless claims, the gap in the US job market is accelerating. On the other hand, after the US debt ceiling was broken, the Treasury Department intensively issued Treasury bills and bonds to replenish cash in its general account, and an incremental financing demand of up to US$300 billion per month is expected, putting the market under short-term liquidity pressure. The Fed's monetary policy will provide financing conditions with marginal easing.
Therefore, we believe that before the resilience of medium- and long-term inflation is significantly manifested, the Federal Reserve's monetary policy will most likely wait and see for a while. US Treasury yields will face the dual effects of liquidity pressure and marginal policy easing in the short term, and are expected to mainly fluctuate, thus suppressing the upside potential of precious metal prices, and gold prices may still continue to fluctuate at high levels.
In the medium to long term, they believe that the US debt predicament makes it difficult for inflation to reach the policy target of 2% within 1-2 years, and it is expected to remain in the range of 3%-3.5%. At the same time, the real interest rate calculated based on the current interest rate hike endpoint (5.08%) is between 1.65% and 2.1%, and it is predicted that gold priced in US dollars will fluctuate between US$1900/ounce and US$2100/ounce, and gold prices will fluctuate for a longer period of time near historical highs. When the US inflation problem is revealed again due to the expansion of the debt ceiling, gold may usher in another opportunity for a trend-based upward movement.
Related News
Gold prices continue to fluctuate.
Gold prices have shown a volatile pattern in the short term, affected by the weakening of the US dollar and changes in sentiment due to easing geopolitical tensions.
Gold prices rise again! Multiple risks fuel safe-haven demand.
From the perspective of the international market, the tense situation in the Middle East, the escalation of the Russia-Ukraine conflict, and the continued high uncertainty surrounding the US Trump administration's tariff policies have driven up gold prices due to increased risk aversion in the market. Furthermore, a significant recent change in the gold market is that gold has become the second-largest reserve asset for central banks globally. How should the future trend of gold prices be viewed? Several analysts have indicated that in the short term, gold prices may fluctuate due to factors such as tariff easing and sudden changes in the geopolitical situation; in the medium to long term, gold prices are still in an upward channel.
As the Russia-Ukraine conflict enters its third year, global attention is once again focused on this geopolitical crisis. According to Dow Jones Newswires, US President Donald Trump made startling remarks at the White House on Thursday (June 5), stating that neither Russia nor Ukraine is prepared for peace, and that both sides may "continue fighting" until one side is willing to compromise. This statement not only signals the failure of his attempts to broker peace, but also introduces new uncertainty to the global geopolitical and economic markets.
Recently, good news came from the China Machinery Metallurgy and Building Materials Workers' Technical Association. In the 2025 National Machinery Metallurgy and Building Materials Industry Workers' Technological Innovation Achievement Award, Shandong Guoda Gold Co., Ltd.'s "Purification of Crude Arsenic Flue Dust to Produce Arsenic Trioxide Industrial Application" and "Key Technology Application for High-Value Utilization of Complex Copper-Gold Ore Resources" projects won the first prize and the second prize respectively. This honor is a high recognition of the workers' technological innovation ability and the effectiveness of achievement transformation, and also fully demonstrates the company's outstanding strength in the industry.
Gold prices return to $3300! Wall Street banks show significant divergence in long-term outlook
In fact, as gold prices fluctuate, Wall Street's major banks have recently shown a clear divergence in their views on gold prices. Unlike Goldman Sachs and Deutsche Bank, which are optimistic about gold's performance, Citigroup believes that the long-term outlook for gold prices is not optimistic.
Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.