On Monday morning (August 19th) in the Asian market, spot gold fluctuated narrowly and is currently trading at $2504.41 per ounce. At the beginning of the session, it reached a high of $2509.66 per ounce, further breaking the historical high set last Friday. The gold price hit a high of $2509.59 per ounce last Friday, closing at $2506.96 per ounce, marking the first time in history that it has reached the 2500 level. As market expectations for the Federal Reserve's September interest rate cut continue to rise, the US dollar has weakened, and tensions in the Middle East have also stimulated demand for gold.

Last week, the gold price accumulated 3.13%, the largest daily increase since the week of April 5th.

The US dollar index fell 0.62% last Friday, closing at 102.41, the lowest closing price since the beginning of the year. The weekly decline was 0.73%, marking the fourth consecutive week of decline, making gold more attractive to overseas buyers.

New York independent metal trader Tai Wong said, "After two weeks of extremely volatile trading, gold soared to a historic high and broke through $2500." Now attention will turn to Jackson Hole and Federal Reserve Chairman Powell's speech a week later to find a more detailed outlook on the upcoming path of interest rate cuts. "

Powell is scheduled to give a speech on the economic outlook on Friday (August 23), the first full day of the Kansas City Fed's annual economic seminar held in Jackson Hole, Wyoming.

The July Producer Price Index (PPI) and Consumer Price Index (CPI) released last week showed that inflation is weakening, which could keep the Federal Reserve on track for a 25 basis point rate cut in September.

Chicago Reserve Chairman Goolsby said that there are no signs of overheating in the US economy, so Fed policymakers should be cautious not to maintain restrictive policies for too long.

There is relatively little economic data this week, and Powell's speech will be the focus of the market this week. In addition, pay attention to the speeches of other Federal Reserve officials and news related to the regional situation. From a technical perspective, the short-term bullish signal for gold prices has significantly strengthened, and it is expected to continue breaking historical highs this week. Pay attention to resistance near 2520 and 2550 in the short term; Given that MACD has also issued a top divergence signal, it is still necessary to guard against the risk of building a top after the gold price surge is blocked.

The construction of single family homes in the United States fell to a 16 month low in July, affected by Hurricane Berrier and oversupply

The construction of single family homes in the United States fell to a 16 month low in July, possibly due to the ravages of Hurricane Beryl and an oversupply of new homes, with rising mortgage rates and housing prices suppressing sales.

The data released by the US Department of Commerce last Friday showed a fifth consecutive month of decline in new home construction, indicating that the housing market remained sluggish at the beginning of the third quarter. The slowdown in the labor market also poses a challenge to the recovery of the real estate market.

The reason for the decline may be that there is already a large supply of new homes for sale, and builders expect relatively weak sales in the coming months, "said Daniel Vielhaber, an economist at Nationwide." For builders, the cost of keeping completed homes in the market is high, and they seem increasingly unwilling to invest more resources in increasing the supply of new homes

According to the Bureau of Statistics of the US Department of Commerce, the construction of single family homes, which account for the majority of residential construction, plummeted 14.1% month on month in July, with a seasonally adjusted annual rate of 851000 units, the lowest level since March 2023.

In the densely populated southern region, new home construction plummeted by 22.9%, which may have been affected by Hurricane Beryl's impact on Texas earlier this month. The construction of new houses in the northeast has also significantly decreased by 27.1%. The western region decreased by 1.4%, but the central and western regions increased by 16.8%.

The construction of single family houses in July decreased by 14.8% year-on-year. After rising for three consecutive quarters, residential investment, including housing construction, experienced a contraction in the second quarter. After the rebound of mortgage interest rates in spring, the housing market weakened.

In May, the average interest rate for 30-year fixed rate mortgage loans reached a peak of 7.22%. Due to the optimistic attitude of the market towards the Fed's interest rate cut next month, the rate has now dropped to 6.45%, but there has not been a strong growth in demand for housing loans.

The inventory of new houses has soared to the level of early 2008. The shortage of second-hand houses for sale has driven the construction of new houses. But the stock of second-hand houses has also rebounded from historical lows.

The survey released by the National Association of Home Builders (NAHB) last Thursday showed that the confidence of home builders dropped to the lowest level in eight months in August. Builders attribute the fourth consecutive month of declining confidence to "challenging housing affordability conditions".

Although we do anticipate a rebound in housing construction and sales activity in August, we are somewhat concerned that the decline in interest rates has not brought about a greater rebound, "said Paul Ashworth, Chief Economist for North America at Capital Economics

In July, the construction of new houses for five or more housing projects increased by 11.7%, with an annual rate of 363000 units. The overall new housing construction has significantly decreased by 6.8%, with an annual rate of 1.238 million units, the lowest level since May 2020. Economists previously predicted that the annual rate of new housing construction would drop to 1.33 million units.

The construction of new houses in July decreased by 16.0% year-on-year. In July, the number of single family building permits decreased by 0.1% month on month, with an annual rate of 938000 units. The number of multi household residential building permits decreased by 12.4%, with an annual rate of 408000 units. The overall decrease in building permits was 4.0%, with an annual rate of 1.396 million units.

The decrease in mortgage interest rates will to some extent support residential construction, but these supports may at least be partially offset by the weak labor market, which has a negative impact on housing demand, "said Oliver Allen, senior US economist at Pantheon Macroeconomics.

The number of houses approved for construction but not yet started increased by 2.6% to 279000 units. The backlog of single family house construction increased by 5.1%, reaching 143000 units. The completion volume of single family homes increased by 0.5%, with an annual rate of 1.054 million units. The overall housing completion volume decreased by 9.8%, with an annual rate of 1.529 million units. The number of residential buildings under construction decreased by 1.6% to 1.539 million units. The inventory of single family homes under construction decreased by 2.1% to 653000 units.

Federal Reserve's Gulsby expresses' concern 'over policy rates remaining at the same level for over a year

Chicago Fed President Goolsby said on Friday that he is "concerned" about the Fed maintaining its policy rate in the range of 5.25% -5.50% since July 2023, even as inflation rates decline and the job market slows, indicating that he will support a rate cut, but did not speak out.

I am indeed concerned that we set interest rates at this level over a year ago, "Goolsby said in an interview with CNN." We have seen inflation rates better than we expected. We have seen the labor market cooling down faster than we anticipated. Therefore, I hope we can take a step back together and think about this issue

The US dollar weakens due to weakened concerns about a recession in the United States

The disappointing US housing market data also continued to put pressure on the US dollar, helping it partially recoup its gains from the previous day due to data showing a downward trend in inflation and resilient consumption.

StoneX's head of market research, Matt Weller, said, "The overall tone of the forex market on August 16th is best described as' correction '. After a significant rebound the day before due to strong US consumer data, the US dollar took some of its gains as traders profited before the weekend.

Last Thursday's data showed that the number of Americans who applied for unemployment benefits fell to a one month low last week, while retail sales in the United States in July recorded the largest growth in one and a half years, which disappointed the expectation that the Federal Reserve might cut interest rates by 50 basis points next month.

According to the FedWatch Tool from Zhishang Institute, the probability of the Federal Reserve cutting interest rates by 50 basis points next month is currently 27.5%.

The US dollar index, which measures the exchange rate of the US dollar against six other major currencies, fell 0.62% to 102.41 on Friday.

Traders are currently monitoring the upcoming Jackson Hole speech by Federal Reserve Chairman Powell, but Weller does not expect him to pre commit to a 25 basis point or 50 basis point rate cut next month.

US Treasury yields fall, market digests optimistic economic data

The yield of US treasury bond bonds fell back last Friday, partially reversing the sharp rise of the previous day, because investors digested the data showing the resilience of US consumers and the declining trend of inflation, which left ample space for the Federal Reserve to cut interest rates slightly next month.

After the big rise and fall of last week, treasury bond closed with a slight rise and fall, and its volatility was almost as sharply weakened as when it soared two weeks ago. After the unemployment rate data triggered near panic that the economy would enter a recession rather than a soft landing, volatility surged.

This once brought the yield down to a level never seen in more than a year, because investors turned to safe treasury bond bonds and sold stocks.

But last week's healthy retail sales data and lower than expected increase in unemployment benefits, coupled with mild inflation data earlier this week, have restored people's confidence in the economic situation. This has led to the largest increase in two-year and 10-year bond yields in weeks as investors have reversed direction. When bond prices rise, yields will decrease.

"The yield dropped slightly, so treasury bond still looks good and is rebounding," said Kim Rupert, managing director of fixed income department of Action Economics in San Francisco.

He said, "The market has been extremely volatile, so we have seen some calmness in the market. I think the September interest rate cut is basically certain, and the market is happy about it

Rupert also said that on August 16, the demand for treasury bond as a hedge rose, mainly due to geopolitical risk factors such as the situation in the Middle East and the Russia Ukraine war.

Due to the absence of a Federal Open Market Committee meeting in August, the market is seeking a strong signal from Federal Reserve Chairman Powell during his speech at the central bank's annual symposium in Jackson Hole, Wyoming on Friday.

August 16th was just a slight correction from the previous day's super trend, "said Jan Nevruzi, US interest rate strategist at TD Securities." We saw some cracks in the unemployment rate, but the underlying trend hasn't really collapsed

He said, "I think Powell will find it difficult to prove in his Jackson Hole speech on August 23rd that we need to significantly reduce interest rates

The yield of the benchmark 10-year treasury bond bond fell 3.6 basis points to 3.89% last Friday from the end of last Thursday, narrowing the biggest weekly rise recorded last Thursday. Last week, the yield fell by 5.2 basis points.

The yield of two-year treasury bond usually changes synchronously with interest rate expectations. It reached the highest point since August 2 last Thursday, and fell 3.7 basis points to 4.0644% late last Friday. Last Thursday, the yield rose by 15.9 basis points, the largest increase since April 10th. Last week's increase was less than 1 basis point.

Russia-Ukraine conflict escalates, and war in the Middle East continues

The General Staff of the Ukrainian Armed Forces announced that in the early morning of the 18th, the Intelligence Directorate of the Ukrainian Ministry of Defense and the Ukrainian Armed Forces took a joint action to attack the Caucasus factory storing petroleum products in Rostov Oblast, Russia. A fire broke out after the attack. On the 18th, the governor of Rostov Oblast in Russia announced that debris from a Ukrainian drone shot down by Russian air defense facilities over the region caused a fire in an industrial warehouse containing diesel fuel. Preliminary information shows no casualties.

At around 1:40 am local time on August 18th, after the missile alarm sounded at the Kursk nuclear power plant in Russia, several muffled explosions could be heard over the city of Kurchatov, possibly intercepted by air defense systems. One minute later, they heard a loud explosion. Kurchatov is a city of nuclear scientists, located about 90 kilometers from the border town of Suja in Kursk Oblast, Russia.

On the 18th, the Israeli Air Force issued a statement stating that the Israeli military had launched attacks on multiple military targets of Hezbollah in Lebanon. The statement stated that earlier that day, Israeli military aircraft attacked an armed group of Hezbollah in the Shebaa area of southern Lebanon. In another attack in the Shebaa region, Israeli fighter jets attacked and destroyed the weapons warehouse used by Hezbollah. On the same day, the Israeli army launched aerial strikes on Hezbollah's military warehouses and a military building in the areas of Etashabu and Matmura, and destroyed the weapons firing devices used by the organization in the southern Lebanese region of Attiri.

On August 18th, Hezbollah announced the use of guided weapons to attack the Israeli military base in al Marj.

The Israeli Defense Forces and security agencies issued a statement in the early morning of August 18th local time, stating that they carried out a joint operation on the evening of August 17th and launched a drone attack in the West Bank city of Jennin, killing two high-level members of the Palestinian Islamic Resistance Movement (Hamas).

Hamas stated that after listening to the mediator's statement on the progress of negotiations, Hamas believes that Israeli Prime Minister Netanyahu is still obstructing the achievement of a ceasefire agreement in Gaza. Hamas stated that the new proposal responds to Netanyahu's conditions and is consistent with them, particularly his refusal to establish a permanent ceasefire and withdraw troops from Gaza, and his insistence on continuing to occupy the Nectarim Corridor, the Rafa Port, and the Philadelphia Corridor in the Gaza Strip. The statement pointed out that Netanyahu has set new conditions for the exchange of documents for detained individuals, which has hindered the completion of the exchange agreement.

The ceasefire agreement negotiations in the Gaza Strip resumed on August 15th in Doha, the capital of Qatar, and were suspended on August 16th. They will continue this week in Cairo, the capital of Egypt. Representatives from Qatar, Egypt, the United States, and Israel attended the talks.

In response, Sami Abu Zuhri, a senior member of the Palestinian Islamic Resistance Movement (Hamas), stated in a statement on the 17th that Biden's statement that the Gaza Strip ceasefire agreement is "close to being reached" is an "illusion". Hamas senior member Zuhri stated that Hamas is not facing agreements or genuine negotiations, but rather orders imposed by the United States. Israel has added new conditions in the negotiations, and the latest transitional proposal put forward by the United States fully adopts Israel's position.

Daily chart of spot gold