US GDP Data is Strong, Gold Short-Term Plummeting!
Last night, the United States released first-quarter GDP data, the initial annual growth rate of 6.4%, meaning that the economic recovery is good, boosting market risk appetite, Treasury bonds encountered a sell-off, the 10-year Treasury yield rose to 1.65%, suppressing the short-term trend of gold. Looking at policy easing, the Fed's April interest rate decision released on Wednesday remained unchanged on interest rates and the size of bond purchases, but stressed that the US economy was improving. As for the fiscal stimulus bill, the Biden administration has proposed a $1.8 trillion bill to support children, students and families while pushing for $2 trillion in infrastructure programs. There is some support under gold in the short term, but in the medium to long term, the pace of raising interest rates is approaching.
The United States announced that the first-quarter GDP data recorded 6.40%, 0.2 percentage points less than expected, but still much better than the previous value of 4.30%. At the same time, the number of initial claims for unemployment benefits in the week ended April 24 recorded 553000, higher than the previous value of 547000 and the expected value of 540000. The continued improvement in economic data has had a significant effect on boosting inflation expectations, but on the other hand, it has also led to a short-term rebound in the dollar index, thus curbing the rise in precious metals prices. At the same time, the improvement of economic data will also make long-end U. S. bond yields show a higher trend. Therefore, at present, precious metal prices may show a relatively tangled trend when interest rates rise in line with inflation. However, as the current orientation of loose monetary policy is still the main theme of the Federal Reserve, precious metals are expected to continue to shock the upward trend.
Thanks to the promotion of vaccines and the gradual lifting of the blockade, as well as the monetary stimulus policy of the Federal Reserve and the fiscal stimulus policy of the US government, the US economy has made significant progress after the COVID-19 pandemic, and its recovery is faster than that of other developed economies. If we can maintain the current momentum, we do not rule out better performance in the second quarter.
The data also show that the US core PCE price index recorded an initial annual rate of 1.5 per cent in the first quarter of last year, the highest since the first quarter of last year, while the initial quarterly rate of real personal consumption expenditure in the United States recorded 10.7 per cent in the first quarter, the highest since the third quarter of last year and is expected to be 10.5 per cent.
After the release of the above good data, gold rallied, rebounding to 1781 levels and then fell sharply by about $25 to around $1756, brushing off a recent half-month low. With the short-term collapse in gold prices, the dollar index stabilized at 90.50 and the yield on 10-year Treasuries approached 1.7% again. One possibility we have to be wary of: gold may have peaked at 1800 at some point.
Although the dollar index has been falling recently, gold has repeatedly stopped at the 1800 mark. After the dovish Fed interest rate decision, gold rose sharply and hit a high of 1790 in Asia today, failing to hit a recent high before falling sharply. The performance of achieving important benefits but not hitting record highs and falling sharply may suggest that gold's upward action may have been exhausted and that bears may regain dominance of the market.
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