Is Gold Ready For Sale In The Second Half Of The Year?

In the first half of 2017, gold finally finished the first half of the 8% increase.

At the beginning of July, it also meant that the market started in the second half of the year.

This week coincides with the US Independence Day holiday. Gold will be relatively light in the beginning of the week, but the second half will be expanded. Investors will face the Fed's June meeting minutes and the first non-agricultural report in the second half of the year - non farm data in June.

Although gold did not perform well in the last week of June, it failed to finish.

But in the first half of the year, gold still recorded a 8% increase, ranking among the top global commodities in the upper and middle reaches.

The following are the rest arrangements for some markets on Independence Day holidays.

The securities and Financial Markets Association advises the bond market to close on Monday at 2 p.m. Eastern time (2 a.m. Beijing time on July 4th) and close on Tuesday.

The New York stock exchange will be closed on Monday at 1 p.m. Eastern time (1 a.m. Beijing time on July 4th) and closed for one day on Tuesday.

The metals, energy and foreign exchange contracts of the Chicago commodity exchange (CME) suspended trading in Beijing on July 5th, and resumed trading at 06:00 on the same morning at 01:00.

ICE's Brent crude oil contract closed early on July 5th at 01:30 Beijing time and opened at 08:00 in the morning.

The gold market will fluctuate on Monday and Tuesday.

People leave the field to wait and see.

In June, the Fed implemented a hawkish interest rate increase.

Yellen expressed optimism about the economy and employment, and even blamed inflation on temporary factors.

But after the announcement of the resolution in June, a number of Fed officials expressed their concern about inflation, which is likely to be highlighted in this summary.

The market thinks the minutes will reveal the start time of the Fed's contraction.

It is expected that the Federal Reserve will raise interest rates in September and announced that it will begin to shrink the table.

The US core CPI has dropped significantly, inflation expectations are also in the doldrums, and wage levels are also declining. The unemployment rate is eye-catching, and the unemployment rate in the United States has remained low.

Unemployment is the core concern of the Fed.

The unemployment rate has reached a new low of sixteen years, and the overall employment has improved.

In April, the unemployment rate in the United States reached 4.4%, a new low of 10 years. In May, the unemployment rate continued to drop to 4.3%, the lowest in 16 years.

From the overall employment rate, it is now fluctuating at 60%, which is 1.5-1.8 percentage points higher than the lowest point during the financial crisis.

However, the number of new jobs began to fall.

In the first two months of this year, the number of newly increased employment reached 21.6 and 232 thousand. In March, the abnormal value was affected by the weather, and dropped to 174 thousand in April. In May, the non-agricultural employment continued to decrease to 138 thousand, lower than the 12 month average level (186 thousand).

Objectively speaking, after more than three years of positive performance, the employment market in the United States is nearly saturated, and it is hard to find a large number of job vacancies and new jobs.

However, compared with the job market, the low inflation level has begun to affect FOMC members' views on short-term interest rate increase.

The US inflation and core inflation index has begun to fall after reaching a high level in the first quarter of this year.

If core inflation continues to fall below 1.5% in the future, it will increase the Fed's concerns about continuing to raise interest rates.

Federal Reserve Chairman Yellen said in a June resolution on monetary policy that the relative downturn in inflation may be just a temporary noise, mainly based on the continuous improvement of the labour market and expected strong pay growth.

The core issue of US inflation is whether the Phillips curve is still established and how far it is.

In theory, the decline in the unemployment rate has led to an increase in pay growth and an increase in inflation. Before 2009, this rule was more established in the United States, but since 2009, the unemployment rate in the United States has dropped from 10% to 4.3%, but the salary growth rate has risen from only about 2% to 2.85%, and the core CPI has increased from 1.6 to 2.3%, in other words, at present

The driving force of market improvement on inflation has not been obvious, is inflation lagging behind or is it still unable to assert its impact?

In June, the conference on interest reduction clarified the following three points: 1) contracting the form: gradually reducing the reinvestment scale of the maturity securities.

2) reduce the time point: start within the year, the specific time has not yet been determined.

According to the analysis, the Fed will follow the three quarter of the US economic and financial market performance to "camera decision" to reduce the scale and increase the order of interest: if the three quarter economic performance is satisfactory to the Fed, then the interest rate will be raised in September, and then the scale will be reduced. If the three quarter's economic pullback is large, it will choose to start the first step to reduce the interest rate until December or next year.

3) reduce the target: the Fed did not publish the final scale of the balance sheet, but only qualitatively pointed out: "the final balance sheet size will be significantly lower than the current level, but higher than the pre crisis level".

42% of the main dealers believe that by the end of 2019, the size of the Federal Reserve's balance sheet will be in the range of 3.5-4 trillion, and 31% of them will be in the 3-3.5 trillion.

Investors expect the median of the Federal Reserve's balance sheet at the end of 2025 to be US $3 trillion and 100 billion.

It is pointed out that shrinking the table will boost the US dollar index. Because the US dollar index is negatively related to the commodity, a strong dollar may suppress commodity prices.

As for reliability, let's take a look back.

Announce the interest rate resolution when Zhou's market reaction.

As of June 14th, the US Energy Fund attracted 599 million capital inflows, the largest in this year, with $322 million from the U.S. Commodity precious metal fund, the largest US financial / bank fund since March this year, the largest since the 2016 general election, according to the Reuters fund analyst.

Many argue that the expansion of the Federal Reserve's balance sheet is conducive to the stock market, so the scale will be revised, and the conclusion is drawn that gold is good news.

But precious metals analyst Arkadiusz Siero pointed out that this is not the case.

Siero explains that taking into account the Fed's shrinking process is passive and gradual, and will have good communication with the market, the impact of shrinking the table is not entirely contrary to the expansion, and the impact on the precious metal market is a priority.

It is worth noting that the Fed's shrinking process has been priced.

"Historically, the first two rounds of QE are beneficial to the gold market, but the third round has become a disaster, because the market's confidence in the US economy has picked up and the demand for gold has declined."

Siero further pointed out that the impact of the Fed's shrinking schedule on the gold market is not easy to determine, which depends to a large extent on the macroeconomic situation.

On the one hand, the Fed's contraction means a rise in long-term interest rates, which is not good news for gold prices.

On the other hand, there may be some turbulence in the financial market, which will support the gold price.

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