At the beginning of the Asian market on Friday (July 12th), spot gold fluctuated narrowly and is currently trading around $2413.44 per ounce. Gold prices jumped more than 2% on Thursday, breaking through the level of $2400 per ounce and reaching a high of $2424.42 per ounce, a new high since May 22, closing at $2415.20 per ounce. Therefore, previous data showed that US consumer prices unexpectedly fell month on month in June, boosting bets on the Federal Reserve cutting interest rates.

Independent metal trader Tai Wong said, "Gold has surged above $2400, and friendly consumer price index (CPI) data almost confirms a rate cut in September. Gold bulls may push gold prices to a record high as early as next week“

Note: Spot gold reached a record high of $2449.89 per ounce on May 20th.

The unexpected month on month decline in consumer prices in the United States in June, with the smallest year-on-year increase in a year, has strengthened the view that the trend of slowing inflation is returning to the right track, bringing the Federal Reserve one step closer to cutting interest rates.

San Francisco Fed President Daley said that it is appropriate to cut interest rates once or twice this year. She said that the recent drop in inflation data is a "relief," and she expects price pressures and the labor market to further slow down, providing reasons for interest rate cuts.

Chicago Fed President Goolsby said that after a slight increase in US inflation earlier this year, it seems to have returned to the track towards 2%. This statement implies that he increasingly believes the timing for a rate cut will soon be ripe

The interest rate futures market expects a probability of about 93% for the Federal Reserve to cut interest rates at its September meeting, and a probability of about 70% before the data is released.

After the US inflation data was released, the US dollar index hit its lowest level in more than a month, making gold more attractive to investors holding other currencies. The yield of US 10-year treasury bond bonds fell to the lowest level in four months.

In addition, the market's expectation of a ceasefire agreement between Israel and Gaza has cooled down, providing upward momentum for gold prices.

This trading day, pay attention to the June PPI data in the United States and the initial value of the University of Michigan Consumer Confidence Index in July, and keep an eye on geopolitical news.

From a technical perspective, the gold price has broken through the 2400 level, the Bollinger Bands have opened, the MACD golden cross signal continues, the KDJ is diverging upwards, and the short-term bullish signal has strengthened. In the future, there will be resistance near the historical high of 2450, and the 2400 level below has been converted into initial support. The high point of 2392.82 on July 5th is further support. If it unexpectedly falls below this level, it will weaken the bullish signal in the future.

Consumer prices in the United States fell month on month for the first time in four years in June, and the Federal Reserve is one step closer to cutting interest rates in September

In June, consumer prices in the United States experienced a month on month decline for the first time in four years, as lower gasoline prices and slower rent increases put inflation firmly back on a downward trajectory and brought the Federal Reserve one step closer to cutting interest rates in September.

The consumer price data released by the US Department of Labor on Thursday remained moderate for the second consecutive month, which should help boost the confidence of Federal Reserve officials that inflation is cooling down after soaring in the first quarter.

The report also shows that the monthly increase in core inflation indicators is the smallest since August 2021. The financial market believes that there is a high possibility that the Federal Reserve will initiate a loose cycle in September.

Unless there is an abnormality in the price data for July, the Fed's interest rate cut in September is already a certainty, "said Brian Bethune, an economics professor at Boston College. This guideline will be solidified at the July meeting

The US Bureau of Labor Statistics stated that the Consumer Price Index (CPI) fell by 0.1% month on month in June, marking the first decline since May 2020, while it remained unchanged in May. The CPI was dragged down by a 3.8% decrease in gasoline prices, with gasoline prices dropping by 3.6% in May. After a 0.4% increase in May, the cost of living, including rent, narrowed to a 0.2% increase.

The CPI in June increased by 3.0% year-on-year, the smallest increase since June 2023. The increase in May was 3.3%. Economists previously predicted that CPI would rise by 0.1% month on month and 3.1% year-on-year.

Excluding the volatile food and energy sectors, the core CPI increased by 0.1% month on month in June. This is the smallest increase since August 2021, compared to a 0.2% increase in May. Core CPI was suppressed as rent only increased by 0.3%, the smallest increase since August 2021.

The general slowdown in inflation is consistent with reports from retailers that consumers are resisting price increases. Retailers, including Target and Wal Mart, have cut prices for a range of products. This is also rare good news for President Biden in recent days, as his reputation has been eroded by the high cost of living.

The year-on-year growth rate of CPI has fallen from its peak of 9.1% in June 2022. Prior to the release of the CPI report, there were reports last week that the unemployment rate in June had risen from 4.0% in May to a two-and-a-half-year high of 4.1%.

Due to the significant interest rate hikes by the Federal Reserve in 2022 and 2023, economic growth has also slowed down. It is expected that the year-on-year growth rate of gross domestic product (GDP) in the second quarter will approach 1.8%, which decision-makers believe will not stimulate inflation.

William Blair macro analyst Richard de Chazal said, "The latest report, as well as the Fed's subtle shift towards a more balanced focus on slowing employment growth, will help make a September rate cut possible

Another report released by the US Department of Labor on Thursday showed that the number of first-time state unemployment claims decreased by 17000 in the week ending July 6, to 222000 seasonally adjusted, the lowest level since late May.

As of the week ending June 29th, the number of people applying for unemployment benefits representing recruitment decreased by 4000, to 1.852 million after seasonal adjustment.

Christopher Rupkey, Chief Economist of FWDBONDS, said, "After a long struggle between the Federal Reserve and inflation, there is finally a glimmer of hope at the end of the tunnel. Interest rate cuts, multiple cuts, are coming soon

Federal Reserve's Daley says it's appropriate to cut interest rates once or twice this year

San Francisco Fed President Daley said on Thursday that the recent drop in inflation data is a "relief" and she expects price pressures and the labor market to further slow down, providing reasons for interest rate cuts.

Based on the information we received today, including data on employment, inflation, gross domestic product (GDP) growth, and economic prospects, I believe it is likely necessary to make policy adjustments, and some policy adjustments are necessary, "Daley said in a telephone group interview." It is still unclear when exactly this will happen and when policy adjustments are appropriate“

As inflation may further cool down, although the process may be "bumpy", the economy seems to be "more or less" moving towards the direction that Federal Reserve policymakers predicted in June that cutting interest rates once or twice this year would be the appropriate path, "she said.

Daley did not rule out the possibility of taking action at the Federal Reserve meeting on July 30-31. She said that action could be taken at each meeting, and before the July meeting, she will obtain more data from meetings with businesses, workers, and community groups, which will provide reference for her decision-making.

She said that since the beginning of this year, the possibility of inflation accelerating has decreased, but inflation may still remain high, and the Federal Reserve is unlikely to need to cut interest rates as quickly as it did.

The question is no longer whether the policy is restrictive, she said, there is no evidence to suggest that the policy is not restrictive, but "when will we relax the restrictions.

She said, 'This is a significant communication signal, and you will hear many of us, especially Chairman Powell, talking about how important the labor market is,' rather than just the need to lower inflation.

She said that the Federal Reserve needs to take action before the unemployment rate sharply rises and before the inflation rate reaches the Fed's 2% target, otherwise it may cause unnecessary harm to workers and the economy

Federal Reserve Gulsby: Inflation is on track to reach 2%, and the easing of housing inflation is encouraging

Chicago Fed President Goolsby said on Thursday that after a slight increase in US inflation earlier this year, it appears to have returned to the track towards 2%, implying that he increasingly believes the timing for a rate cut will soon be ripe.

Gulsby told reporters in a group interview, "My view is that we are on the track towards 2%

A government report earlier on Thursday showed an unexpected month on month decline in consumer prices in June. He said that this is "excellent" news, and the May data suggests that the stronger than expected inflation data in January was just a "minor episode".

He added that the report also showed a relief in housing inflation, which has been long-awaited and "deeply encouraging".

Gulsby refused to disclose whether he will push for a rate cut at the next Federal Reserve policy meeting on July 30-31.

However, he did indicate that the Federal Reserve has been maintaining its policy rate range at 5.25% -5.5% since July last year, which actually means that the Fed is increasingly putting the brakes on the economy.

By staying put, we are tightening... and the starting point is the highest level of restrictions in decades, "Gulsby said. If you think the economy is overheating, this is either a reason for such strict restrictive measures or a reason for actually tightening policies. In my opinion, the economy doesn't seem to be overheating

US Treasury yields fall to lowest since mid March, unexpected drop in inflation in June strengthens expectations of September interest rate cuts

The yield of US treasury bond bonds fell on Thursday after US data showed that consumer prices in the world's largest economy fell in June, strengthening the expectation that the Federal Reserve will cut interest rates in September.

The yield of two-year to 10-year treasury bond fell to the lowest level since mid March, and the yield of 20-year and 30-year treasury bond fell to two-week lows.

How many months of inflation reduction environment does the Federal Reserve need to feel confident, and now the countdown has begun, "said Ellis Phifer, Managing Director of Fixed Income Research at Raymond James. In addition, there are quite a few discussions where we have more than one type of risk“

We have the risk of staying inactive for too long, which they usually do, "he added. This is the reason why the bond market has always lacked direction

The yield on the 10-year treasury bond bond fell 7.6 basis points to 4.204% late Thursday. It once fell to 4.181% during trading, hitting a four month low.

According to calculations by the London Stock Exchange Group (LSEG), the expectation digested by the US interest rate futures market is that there will be approximately two interest rate cuts this year, each by 25 basis points. The rate cuts are likely to begin in September, with a probability of 93%. This probability is higher than 75% on Wednesday.

Steven Blitz, Chief US Economist at TS Lombard, wrote in a research report, "The June CPI data confirms the bias shown by Federal Reserve Chairman Powell during his testimony in Congress... guiding the market to expect a rate cut in September and shortening the timeline for ultimately lowering the federal funds rate by 100 basis points, all of which will not lead to an economic recession

The US dollar index fell 0.49% at the end of Thursday's trading session, closing at 104.45, having previously touched its lowest level since June 7th at 104.07.

Israel claims that Hamas' ceasefire demands contradict the blueprint of the agreement

Israeli Prime Minister Netanyahu on Thursday accused the Palestinian militant group Hamas of making demands in Gaza ceasefire negotiations that contradict the framework agreement mediated by Washington.

At the same time as Netanyahu's speech, some residents of Gaza City were trapped in their houses, and bodies on the streets were left unattended; Previously, Israel launched a new round of fierce attacks, which Hamas claimed could undermine the prospects of a ceasefire.

Washington is pushing for a peace agreement in Egypt and Qatar to end the Gaza War, which is now in its tenth month. Netanyahu's office stated that the head of the Israeli security agency Shin Bet is heading to Cairo to continue negotiations.

Netanyahu delivered a speech at a military ceremony in Israel, stating, "I am committed to the framework agreement for the release of hostages, but Hamas militants insist on demands that contradict the framework, which endangers Israel." He did not specify which demands.

In Washington, National Security Advisor Sullivan said that many details still need to be finalized before an agreement can be reached. Sullivan told reporters, "If we can reach an agreement, there is still a long way to go. Therefore, I don't want to say that it will come soon, but if everyone is willing to complete the agreement, it won't be indefinitely

Hamas stated in a statement that the mediator has not provided them with an update on the progress of negotiations since they made concessions last week regarding the US supported Israeli peace proposal.

Residents of Gaza City say that this week's offensive is comparable to the most intense battles of the war. Although most of Gaza City has been flattened so far, hundreds of thousands of Palestinians have returned to their homes in ruins. Now, the Israeli military has once again ordered them to leave. Many people say they won't leave.

On Wednesday, the Israeli military told residents of Gaza City to use two "safe routes" to head south. Some people post hashtags on social media with the hashtag # We won't leave #.

The Israeli military stated in a statement that its forces are working to dismantle Hamas' capabilities and that it is "complying with international law and taking feasible preventive measures to reduce harm to civilians." The Israeli military stated that Hamas is not doing so.

Before the negotiations between Qatar and Egypt, Hamas made important concessions last week, accepting the possibility of starting a ceasefire and releasing some hostages without Israel agreeing to end the war first.

Hamas accused Israel in its statement on Thursday of "delaying time to buy time and obstruct this round of negotiations, just like they did in previous rounds." Since the week-long ceasefire in November, all negotiations have ended in failure.