At the beginning of the Asian market on Monday (July 29th), spot gold slightly rose, soaring nearly $15 at one point, breaking the 2400 mark to $2303.02 per ounce, and currently trading around $2397.15 per ounce. Last week, hardware prices rose 1% to close at $2388.15 per ounce, as although the US PCE data was stronger than market expectations, it failed to change market expectations for the Fed's September interest rate cut, and buying on dips poured in to support gold prices. In addition, concerns about the geopolitical situation in the Middle East and the uncertainty of the US presidential election have led to a rebound in safe haven demand for gold.

This week will see the Federal Reserve's interest rate decision, the Bank of Japan's decision, and the Bank of England's interest rate decision, as well as important economic data such as the Eurozone's Q2 GDP, China's official manufacturing PMI, US JOLTs job vacancies, 22:00 US ISM manufacturing PMI, and US non farm payroll report. It can be said to be a super week, and investors need to make time arrangements and position adjustments in advance.

Gold prices rose 1% on Friday, as optimistic expectations of a Fed rate cut in September pushed down US Treasury yields after data showed only a slight increase in US prices in June.

Fawad Razaqzada, a market analyst at Forex, said, "The mixed US data suggests that inflationary pressures and economic activity are weakening, paving the way for the Federal Reserve to cut interest rates twice this year

Federal Reserve policymakers received new evidence on Friday that progress has been made in the inflation battle, which has also boosted expectations that next week's meeting will signal a rate cut starting in September.

The Bureau of Economic Analysis of the US Department of Commerce stated that the Personal Consumption Expenditures (PCE) price index rose slightly by 0.1% in June after remaining unchanged in May compared to the previous month.

Excluding the volatile food and energy sectors, the core PCE price index increased by 0.2% month on month in June, and before rounding, it increased by 0.182%. The increase before rounding in May has been revised up to 0.127%, compared to the previous value of 0.083%.

The core PCE in June increased by 2.6% year-on-year, which is comparable to the increase in May. In the three months ending in June, core PCE increased by an annualized rate of 2.3%, a significant slowdown compared to 2.7% in May.

After the data was released, the yield on 10-year US Treasury bonds fell to its lowest point in a week, closing at 4.197%.

Meanwhile, India, the world's second-largest consumer of gold, reduced import tariffs on gold and silver earlier this week, boosting the country's physical demand. Last week, India's gold premium surged to its highest level in a decade.

Everett Millman, Chief Market Analyst at Gainesville Coins, stated. Any growth in India or China will have an external impact on overall demand... I believe that (India's) measures to reduce tariffs will only have a positive impact on demand“

In addition, in recent days, Israel and Lebanon have experienced a "brush fire", raising concerns in the market about the escalation of tensions in the Middle East, providing further upward momentum for gold prices in the short term.

Pay attention to the situation in the Middle East, Israel and Lebanon face the risk of escalating conflict

The latest news shows that the Israeli Security Cabinet has authorized Prime Minister Netanyahu and Defense Minister Galant to launch military strikes against Hezbollah in response to Hezbollah's rocket attack on the Golan Heights town of Majidar Shams on the 27th.

On July 28th local time, the Israeli Ministry of Foreign Affairs announced that on July 27th, Hezbollah launched a rocket attack on the Israeli occupied town of Majidar Shams in the Golan Heights, resulting in the death of 12 children. This move has crossed all red lines. Previously, Hezbollah in Lebanon stated that it had "nothing to do" with the attack. On the late night of the 28th local time, Israeli fighter jets launched airstrikes on areas in southern Lebanon near the temporary border between the two countries.

Israeli fighter jets launched overnight airstrikes on multiple towns in the southern Lebanese region of Tyre, including an attack on a house in Burzi Al Shamali that resulted in injuries to local residents. The Israeli army also launched an attack on Tyre Haifa, causing serious damage to local crops. In addition, Israeli drones also attacked a house located in Taraya village in the Baalbek area of central Lebanon, causing damage to the house.

Two security sources stated on July 28th that Hezbollah in Lebanon is on high alert and has cleared some key locations in eastern and southern Lebanon to prevent Israel from escalating the conflict.

According to Al Manar TV in Lebanon on July 28th, after accusing Hezbollah of shelling the Golan Heights and causing 12 deaths, Israeli fighter jets attacked at least 5 towns and villages in southern Lebanon. Israeli warplanes' bombed the towns of Syam and Kafar Kira in southern Lebanon ', as well as the suburbs of Abbasiyah and Burk al Shimali in the Tyre district of southern Lebanon. In addition, they also launched a rocket at the village of Tiyalhafa.

On the 27th local time, after a town in the Golan Heights occupied by Israel was attacked by rockets, Iranian Ambassador to Lebanon Armani posted on social media that Iran has been committed to easing regional tensions, and Iran neither believes that military actions in Lebanon and related areas will escalate, nor does Iran intend to push for an escalation. Meanwhile, Iran is not afraid of the escalation of the situation in the relevant regions.

On July 28th local time, Iranian Foreign Ministry spokesperson Kanani issued a statement strongly warning Israel not to use the "Majidar Shams incident" as an excuse to launch new risky actions against Lebanon. Kanani pointed out that supporting regional stability and security, including Lebanon, and combating Israel's risky actions is the responsibility of the international community, especially the United Nations Security Council. He emphasized that Israel's actions may lead to continued instability, insecurity, and war in the region. Kanani suggested that the US government should not continue to provide Israel with weapons of mass destruction, but should fulfill its international morality and responsibility, and take action for world peace and security.

On the 28th local time, EU High Representative for Foreign Affairs and Security Policy Borrell strongly condemned the attack on the Golan Heights on social media. He stated that an independent international investigation is needed into this attack and urged all parties to exercise restraint and avoid escalation of the conflict.

The spokesperson for the White House National Security Council stated that the United States condemns the attack on the Golan Heights and reaffirms its willingness to provide "firm support" to Israel to resist future attacks. He added that the United States' support for Israel "firmly opposes all Iranian backed terrorist organizations," including Hezbollah in Lebanon.

At present, the market's concerns about the geopolitical situation in the Middle East have significantly increased, which is expected to provide further upward momentum for gold prices. However, investors also need to pay attention to the situation between Russia and Ukraine and the related news of the Gaza ceasefire negotiations.

According to US media reports on July 26th, officials from Qatar, Egypt, the United States, and Israel will hold talks in the Italian capital Rome on July 28th to discuss the ceasefire agreement in the Gaza Strip. The report quoted officials from the United States and Israel as saying that Qatar's Prime Minister and Foreign Minister Mohammed, Egyptian Intelligence Director Kamal, Israeli Intelligence and Special Services Agency (Mossad) Director Barnea, and US Central Intelligence Agency Director Burns will attend the talks. But sources expect that this meeting will not have specific discussions on the differences among the parties in the negotiations, but will focus on the principles and strategies for continuing to advance the negotiations.

On July 26th, the Russian Ministry of Defense reported that from July 20th to 26th, the Russian military launched 33 rounds of large-scale strikes using long-range precision guided weapons and attack drones on temporary deployment points of Ukrainian military forces and foreign mercenaries, military trains, armored vehicle production and repair facilities, Ukrainian military weapon and equipment warehouses, fuel warehouses, etc. The Russian military has shot down a Ukrainian Mi-8 helicopter and hundreds of drones in the past week. On the same day, the General Staff of the Ukrainian Armed Forces issued a war report stating that there were 78 battles in the front-line areas that day.

PCE data does not change Federal Reserve's expectations for September rate cuts, focus on US employment data and Federal Reserve decision

Analyst: PCE data gives green light for Fed to cut interest rates later

Bret Kenwell, an analyst at financial investment services firm eToro, stated that the June PCE report in the United States largely met economists' expectations, while the year-on-year increase in the core PCE index was only slightly higher than expected. However, there is no indication in the report that inflation will unexpectedly accelerate. Combined with the lower than expected CPI report earlier this month and the recent trend of lower inflation data, this should give the Federal Reserve the green light to cut interest rates later this quarter. At the next week's Federal Reserve meeting, all eyes will shift to Powell, and people hope and expect him to lay the foundation for the September rate cut. In recent years, the Federal Reserve has been very transparent, announcing its actions long in advance, adding more certainty, and the market likes certainty.

Analyst: The US core PCE index is higher than expected and not enough to change the expectation of a September interest rate cut

Analyst Cameron Crise stated that the US PCE price index is roughly in line with expectations, but as previously mentioned, after some revisions, the year-on-year change in core data is slightly higher than expected. Considering the general market forecast, the new level of the core index is slightly higher than expected. Excluding the core service expenditure data for housing, it is not as moderate as the corresponding data in the CPI report, with a month on month increase of 0.19%. The corresponding data for the previous month has been raised from 0.1% to 0.18%. These data are not enough to prevent the Federal Reserve from cutting interest rates in September, but there is also no indication that the Fed needs to cut interest rates early or by more than 25 basis points. The bond market may be reacting to weaker income/expenditure data as inflation data seems insufficient to support any rebound.

US consumer confidence drops to an 8-month low as high inflation continues to exert pressure

Due to the continued pressure of high inflation on personal financial conditions, consumer confidence in the United States fell to an eight month low in July. According to data released by the University of Michigan, the final consumer confidence index for July decreased from 68.2 in June (66 before correction) to 66.4. Consumers expect prices to rise at a year-on-year rate of 2.9% in the coming year, the lowest level in four months, slightly lower than the 3% expected in June. They also expect an average price increase of 3% in the next 5 to 10 years, roughly the same as a month ago. Since the first quarter, consumer confidence has been declining, reflecting high living costs and high borrowing costs, leading to pessimistic views and expectations about personal financial situations. Although inflation has started to cool down, wage growth remains moderate, and many Americans have already used up their savings during the pandemic. The survey leader Joanne Hsu said, "Consumer confidence has risen 33% from its historical low in June 2022, but remains cautious as high inflation continues to weigh on people's attitudes, especially among low-income groups

Analyst: Expected US job vacancies to continue steadily declining trend

According to Giuseppe Dellamotta, an analyst at the financial website Forexlive, the expected job vacancies in the United States for July are 80.25 million, compared to 81.4 million previously. Since reaching its peak in March 2022, job vacancies have been steadily declining and are currently approaching pre pandemic levels. This is good news for the Federal Reserve, as the labor market continues to rebalance by reducing employment opportunities rather than increasing layoffs. However, at this stage of the economic cycle, the labor market still deserves close attention.

The latest prediction from the "Federal Reserve Messenger": The Fed's interest rate cut has finally entered the field of vision

The latest article by Nick Timiraos, the voice of the Federal Reserve, suggests that although Fed officials are unlikely to cut interest rates next week, developments in inflation and the labor market should signal a rate cut at the September meeting. Powell, who tends to take action earlier, has been weighing the risks of cutting interest rates too early and waiting too long, and this issue will be resolved at next week's meeting. Officials hope to have more evidence that inflation is indeed cooling down before crossing the threshold for interest rate cuts. Nevertheless, officials are increasingly worried that waiting too long will lead to a soft landing foam. The Federal Reserve's preparation to cut interest rates reflects three factors: positive inflation, cooling job market, and changing considerations of the dual risks of allowing inflation to remain too high and causing unnecessary economic weakness.

Pay attention to the interest rate decisions of the Bank of England and the Bank of Japan

Analyst: Bank of England expects to cut interest rates by 25 basis points

Institutional analysts predict that the Bank of England may cut interest rates by 25 basis points to 5% on August 1st. The data since the last meeting of the bank shows that price pressure may be more stubborn than expected, so this decision faces risks. But the Bank of England has shown a willingness to tolerate unexpected increases in inflation, especially when inflation surprises are driven by volatile categories.

Overall, we believe that six out of nine members of the committee support a rate cut, and the bank also hopes to avoid giving the impression that interest rates will rapidly decline. We expect the Bank of England to link more easing policies with further progress on inflation sustainability indicators, indicating that the bank has time to take action again. There may be another interest rate cut in November, with a quarterly rhythm, until 2025.

Analyst: Inflation has not improved, there is a high possibility that the Bank of England will maintain interest rate stability

Forexlive analyst Giuseppe Dellamotta pointed out that the market believes there is a 50% chance that the Bank of England will cut interest rates by 25 basis points, reducing the current rate from 5.25% to 5.00%. Once again, I believe that expectations are incorrect because there is a high possibility that interest rates will remain stable. Unless inflation data is very good or employment data shows a very bad situation, the Bank of England is not very willing to cut interest rates for the first time in August. The latest UK CPI is not good, as core data and service inflation remain unchanged. In terms of the labor market, the latest report is basically in line with expectations, and wage growth is still at a high level. Therefore, I believe that the Bank of England may stabilize interest rates at 5.25%.

Analysts disagree on whether the Bank of Japan will further raise interest rates

The Bank of Japan will hold policy meetings next Tuesday and Wednesday, and analysts are divided on whether the central bank will further raise policy rates. The recent strengthening of the Japanese yen has sparked speculation that the Bank of Japan may postpone interest rate hikes, as a stronger yen could lower the prices of imported goods in Japan, thereby slowing down inflation. However, some analysts point out that Japanese politicians are calling on the central bank to further tighten policies to ease the weakness of the yen. For over two years, inflation has been above the Bank of Japan's 2% target, and the depreciation of the yen has made imported products such as food and energy more expensive. Although raising interest rates may alleviate some of the selling pressure on the yen, there are also concerns that it may further undermine Japan's fragile consumer confidence. As a step towards vectorized tightening, the Bank of Japan will announce a detailed plan to reduce the scale of bond purchases.

Pay attention to the US election: Harris and Trump's poll data are "neck and neck"

The latest data shows that the polls of US Vice President Harris, who has basically secured the Democratic presidential nomination, are close to those of Republican presidential candidate and former President Trump, and the current election situation is tight.

According to poll data compiled by the US election information website "True Transparency Politics", as of the 25th, Trump is leading Harris by an average of 1.7 percentage points in national polls.

The latest poll released by The Wall Street Journal on the 25th shows that Trump leads Harris by 2 percentage points. The newspaper reported that Harris and Trump's approval ratings are "on par," indicating an increase in support for Harris among non white voters and a significant boost in enthusiasm among Democrats for this election. In several key swing states that may determine the final election outcome, the support rates of the two are also very close.

Daily chart of spot gold