On Tuesday (July 16th) morning trading in the Asian market, spot gold fluctuated narrowly and is currently trading around $2422.35 per ounce. Gold prices rose to a nearly two month high of $2439.62 per ounce on Monday, closing at $2422.11 per ounce, aided by further expectations of a Fed rate cut in September. Traders are waiting for more statements from Fed officials to determine the timing of the rate cut.

According to CME's FedWatch tool, the market currently believes that there is a 100% chance of a US interest rate cut in September.

2439.62 is the highest level since May 20th, when gold prices hit a record high of $2449.89 per ounce.

Jim Wyckoff, Senior Market Analyst at Kitco Metals, said, "The trend of gold and silver prices will continue to sideways rise, and I wouldn't be surprised if they hit record highs in the coming weeks or even earlier

Federal Reserve Chairman Powell stated that the three sets of inflation readings for the second quarter of this year indicate that "more progress" is being made in pushing the pace of price increases back to the Fed's target.

At the same time, the yield on long-term US Treasury bonds has risen, and investors are evaluating whether the assassination attempt on US presidential candidate Trump has increased his chances of winning.

The geopolitical situation in the Middle East has also provided some support for gold prices, with media reports stating that multiple areas in Israel have been attacked by rockets, cruise missiles, and other missiles.

This week's focus will be on US June retail sales (commonly known as "terror data", released on Tuesday) and industrial output data, as well as weekly unemployment claims data, which may provide more clues about the strength of the US economy.

Federal Reserve's Daley says confidence in beating inflation is growing

San Francisco Fed President Mary Daly said on Monday that inflation is moving towards the Fed's 2% target, and "this confidence is growing. The 2% inflation target is the threshold set by policy makers for interest rate cuts.

Daley said at a technology themed conference held by Fortune magazine in Park City, Utah, "We are approaching a sustainable pace of reducing inflation to 2%, and this confidence is growing." She also stated that she expects policy adjustments to be made at some point.

I won't provide guidance based on time. I won't tell you when to cut interest rates, maybe several times, "Daley said. As time goes on, with inflation falling and the labor market slowing down, we must ensure that interest rates are maintained at a sufficiently high level so that we do not lose the fight against inflation, but also not for too long, and not let the labor market deteriorate to the point where people face challenges in finding jobs

The next meeting of the Federal Reserve will be held in about two weeks, and it is widely expected that the Fed will stabilize its policy within the range of 5.25% -5.5%, which has been maintained since July last year

Federal Reserve Powell said that the latest data has to some extent boosted confidence in inflation returning to target

Federal Reserve Chairman Powell stated on Monday that the three sets of US inflation readings for the second quarter of this year have "to some extent boosted confidence," indicating that the pace of price increases is continuously approaching the Fed's target. This statement suggests that a shift towards interest rate cuts may not be too far away.

In fact, we did make some progress in curbing inflation in the second quarter, "Powell said at an event at the Washington Economic Club. We have seen three sets of improved readings, and if you average them, it's a pretty good position

Excluding the volatile food and energy sectors, the annual growth rate of consumer prices in the second quarter was 2.1%, which is often higher than the personal consumption expenditure (PCE) price index favored by the Federal Reserve. The PCE data for June will not be released until next week.

We have already stated that we believe it is inappropriate to start relaxing policy until we have greater confidence in the continued decline of inflation towards 2%, "Powell said." We have been waiting for this. What I want to say is that we didn't gain any more confidence in the first quarter, but the three sets of readings in the second quarter, including last week's readings, did to some extent boost our confidence.

Last week, the US Department of Labor reported that the Consumer Price Index (CPI) experienced its first month on month decline in four years in June. In addition to the Producer Price Index (PPI) data released a day later, economists now estimate that the PCE price index favored by the Federal Reserve will show a year-on-year price increase of nearly 2%.

Powell's description of the economy implies that he believes the economy has returned to balance in some important aspects, which will drive inflation steadily back to the Fed's goals and give the Fed more room to protect the full employment aspect of its dual responsibilities. The labor market is not idle... basically we are currently in a state of balance, "he said. The unemployment rate is currently 4.1%, only 0.1 percentage points lower than the median estimated by Federal Reserve officials to be in line with a 2% inflation rate and reach full employment.

Powell said, "Look at the inflation rate. The inflation rate is 2.5%." He said that the situation where the inflation rate has fallen from its peak and the unemployment rate has not risen rapidly "breaks many traditional views.

Powell also stated at the meeting that he intends to serve until the end of his term as chairman in early 2026, but declined to specify whether he will continue to serve if the next president appoints him as chairman. This may be Powell's last public statement before the press conference following the Federal Reserve's meeting on July 30-31.

Federal Reserve Board members Christopher Waller and Adriana Kugler, as well as other decision-makers, will speak later this week, which may provide more information about the Fed's policy considerations at a critical moment of policy review.

When Powell spoke, the financial market almost ruled out the possibility of the previously heated July interest rate cut. Traders continue to expect the Federal Reserve to cut interest rates in September, followed by further cuts in November and December, and are expected to lower the policy rate range to 4.5% -4.75% by the end of the year

The US dollar fell after Powell's speech

The US dollar fell slightly on Monday after Federal Reserve Chairman Powell's speech, as investors bet that the attempted assassination of former President Trump has increased its chances of winning.

After the assassination, investors believe that Trump's chances of winning have increased. The current odds on the online gambling website PredictIt suggest a probability of about 67% for Trump to win, about 60% last Friday, and about 27% for Biden to win.

As part of the "Trump Deal" assets, which may perform well under Trump's presidency, adopting hawkish trade policies and relaxing regulations on certain industries, the US dollar tends to rise.

However, it has been proven that the initial reaction was short-lived, as the US dollar fell from its earlier high.

When Powell began speaking, the US dollar also briefly fell sharply. He stated that the three sets of inflation readings in the second quarter of the United States have "to some extent boosted confidence", indicating that the rate of price increases is continuously falling towards the Federal Reserve's target, suggesting that interest rate cuts may be imminent.

Marc Chandler, Chief Market Strategist at Bannockburn Global Forex, said, "The market has confidence in the September rate cut, and they had confidence before (Powell) spoke. I don't think he really said it's possible, but it's clear that it's possible. Powell could have more strongly stated that we've achieved a soft landing, and now let's avoid a hard landing. That's the logic that's going to unfold now

On Monday, the US dollar index rose as high as 104.31 and fell 0.07% at the end of the session, closing at 104.22.

According to the FedWatch tool from CME, the market has fully digested the expectation that the Federal Reserve will cut interest rates by at least 25 basis points in September. Last week's data showed the first month on month decline in consumer prices in four years in June.

Investors still need to pay attention to the impact of news related to the US election on market sentiment.

Trump has been officially nominated as the Republican presidential candidate, choosing J D. Vance is a running mate

companion

The Republican National Convention in the United States opened in Milwaukee, and the Republican Party officially nominated Trump as the 2024 presidential candidate, while the former US president chose Senator J D. Vance serves as his running mate and vice presidential candidate.

As Vice President, J.D. will continue to fight for our Constitution, stand with our military, and do everything he can to help me make America great again, "Trump wrote on his Truth Social platform.

The four-day conference opened at an indoor sports arena in downtown Milwaukee. Two days ago, Trump was assassinated in Pennsylvania; A few hours ago, he achieved a major legal victory as a federal judge dismissed a criminal prosecution against him.

Trump will officially accept the Democratic nomination in his prime time speech on Thursday and challenge Democratic President Biden in the November 5th election.

After the assassination attempt, Trump stated that he is revising his acceptance speech to emphasize national unity rather than highlighting his differences from Biden.

This is an opportunity to unite the entire country, and even the whole world. The speech content will be very different from what was prepared two days ago, "Trump told the Washington Examiner. The assassin's bullet grazed Trump's right ear, but did not cause significant damage.

Investigators say they are still unable to determine what ideology inspired 20-year-old Thomas Matthew Crooks to assassinate Trump. Although Trump narrowly escaped, a supporter on the scene unfortunately died.

Biden ordered an independent investigation into the assassination. Congressional investigators will also question the head of the United States Secret Service responsible for protecting the former president.

Republicans attending the Republican convention said they are not inclined to reassess the party's traditional stance against gun restrictions.

If someone drives into someone, they won't ban cars, "said Melanie Collette, a representative from New Jersey." If someone stabs someone with a knife, they won't ban it either

Multiple areas in Israel have been attacked by rockets, cruise missiles, and other missiles

On the evening of July 15th local time, the Israeli Defense Forces announced that they had detected approximately 20 rockets fired from southern Lebanon towards northern Israel that evening. Air raid sirens sounded in the northern Israeli town of Shemona and surrounding areas, with most of the rockets intercepted by Israeli air defense systems and no reports of casualties reported.

On July 15th local time, the Iraqi militia armed group "Islamic Resistance Organization" issued a statement stating that the organization had launched attacks using drones and cruise missiles on the Umm Rashash area of the southern Israeli city of Eilat and the largest port in Israel, Haifa Port.

On the 15th, Hezbollah in Lebanon issued a statement stating that its armed personnel attacked Israeli military targets located on Kafar Shuba Mountain and on the side of the temporary border between Lebanon and Israel, in Raab and Pranite.

technical analysis

At the daily level, the moving average is in a bullish position, with MACD crosses and Bollinger Bands opening, and KDJ diverging upwards. If the gold price can break through the resistance near the 2450 level on May 20th, it is expected to open a new upward channel, and price estimates are expected to look above the 2600 level.

However, since April 15th, the overall trend of gold prices has been fluctuating at a high level of the box, and is currently close to the resistance at the top of the box. It is still necessary to guard against the risk of short-term peaks. The initial support is around the 5-day moving average of 2408.06, followed by the 2400 level support, and the 10 day moving average support is around 2386.65. If the gold price falls below this level, it will increase the bearish signal for the future market.