The precious metals market extended its weak performance overnight, with gold prices continuing their downward drift amid persistent hawkish signals from Federal Reserve officials and high US Treasury yields.
On September 21, COMEX gold fluctuated lower during the session, settling at $4,381.0 per ounce, down 0.99%. Meanwhile, the domestic SHFE gold contract traded sideways during the night session, closing at 939.26 yuan per gram, a decrease of 0.39%.
The Chicago Fed President warned that supply-side shocks have become more frequent and longer-lasting in recent years. If price pressures from the supply side continue to spread, central banks may still need to tighten policy to curb inflation, though the trade-off could involve reduced employment, lower wages, and slower economic growth. The St. Louis Fed President also indicated that, driven by strong domestic demand and rising commodity prices, the Fed would "likely" need to continue raising interest rates to contain inflation.
In response to these hawkish remarks from Fed officials, the US dollar edged higher, putting downward pressure on gold prices. On the geopolitical front, former President Trump reportedly halted airstrikes against Houthi forces and later stated he would convene a meeting regarding Iran.
Following the Fed's September rate hike, the dot plot suggests the possibility of one more increase within the year. However, significant internal divisions at the Fed over using rate hikes to combat inflation have limited the scope for gold speculation. Market participants are also closely monitoring US economic and employment trends, and any economic or jobs data that falls short of expectations during this period could strengthen investors' conviction in the stagflation narrative.
Additionally, based on the latest moves from various parties, energy-driven inflation appears to be a common target for suppression. The Fed's willingness to raise rates again this year remains highly uncertain. As a result, gold is likely to remain constrained in the near term by lingering concerns over potential further rate hikes. Data sources include Wind and the Everbright Futures Research Institute.
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