Gold bears have assembled, waiting for the Federal Reserve to raise interest rates

Daocheng Technology Financial News - On Friday (April 19), spot gold fluctuated slightly below its all-time high level in Asian session, and is currently trading around $2376.49 an ounce. Safe-haven gold rose 0.74% on Thursday to close at $2378.65 an ounce, as continued tensions in the Middle East increased the attractiveness of gold, but strong economic data from the United States strengthened the prospect of fewer interest rate cuts, and even someFederal Reserve officials say they will raise interest ratesKeep an open mind, which still allowsGold priceWe face further downside risks in the short term.

In the Middle East, despite Western calls for restraint, Israel has said it will retaliate against a series of Iranian attacks, without specifying how.

"When geopolitical tensions arise, the natural reaction for investors is to flee to gold, and here it is," said Everett Millman, chief market analyst at Gainesville Coins. "If the conflict escalates further, gold could rise to $2,500 to $2,600, and if there is a ceasefire, gold could fall to $2,200."

He added: "Central bank purchases have also supported gold prices."

However, data showed that the number of initial jobless claims in the United States remained at a low level last week, and the hawkish remarks of Federal Reserve officials prompted investors to reflect sharply on the possibility of the Federal Reserve cutting interest rates soon. Gold prices are still under pressure below the 2400 mark. In the short term, we need to beware of the possibility of a shock peak, and at least we need to beware of the risk of further correction.

This trading day, there is less economic data, and we continue to pay attention to the news related to the geopolitical situation in the Middle East and the remarks of Federal Reserve officials.

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The United States and Britain announced new sanctions against Iran, covering drone projects and the steel and automotive industries

The United States announced new sanctions on Iran on Thursday, targeting its drone production, and President Joe Biden said the leaders of the Group of Seven nations pledged to act together to increase economic pressure on Iran.

Britain announced that it would cooperate with Washington and also impose sanctions on Iran.

Biden said the United States and its allies helped Israel repel the April 13 missile and drone attacks and are now holding Iran accountable through new sanctions and export controls.

"The sanctions target leaders and entities associated with the Islamic Revolutionary Guard Corps, the Iranian Defense Ministry, and the Iranian government's missile and drone programs who facilitated this brazen attack," Mr. Biden said in a statement.

British Foreign Secretary David Cameron called Iran's actions "unacceptable."

"[It] is a message to Israel that we want to play our part in the strategic co-ordination of the response to Iranian aggression," Mr. Cameron said on the sidelines of a G7 foreign ministers' meeting in Italy.

The US Treasury said the US move targeted 16 individuals and two entities who helped Iran produce drones.

Israel says it will retaliate for Iran's unprecedented launch of a missile and drone strike, with a senior commander of Iran's Revolutionary Guards saying on Thursday that Tehran may reassess its "nuclear strategy" in the face of Israeli threats.

The US Treasury said its sanctions also involve five companies that supply Khuzestan Steel (KSC), one of Iran's largest steel producers, with component materials for steel production or purchase finished steel from KSC.

The United States has also targeted three subsidiaries of Iranian automaker Bahman Group for providing material support to Iran's Islamic Revolutionary Guard Corps.

In a separate announcement, the Commerce Department said it would further restrict Iran's access to "low-level technology" and add to the list of items that require a license to export or re-export to Iran, including goods made abroad using American technology.

The US labor market continues to demonstrate resilience

The number of initial jobless claims in the United States remained unchanged at a low level last week, suggesting that continued strength in the labor market is helping the economy.

The labor market's resilience, coupled with rising inflation, has prompted financial marekt and some economists to expect the Fed to delay cutting interest rates until September. A few economists are even skeptical that the Fed will lower borrowing costs this year.

The Labor Department said on Thursday that initial state jobless claims for the week ending April 13 were flat at 212,000 on a seasonally adjusted basis. Economists interviewed had expected initial jobless claims to be 215,000 last week. So far this year, initial jobless claims have been stuck in the 194,000-225,000 range.

Federal Reserve Chairperson Jerome Powell on Tuesday did not provide any guidance on when a rate cut might be possible, instead saying monetary policy needs to remain restrictive for longer. Financial marekt initially expected the Fed to cut rates for the first time in March, but with labor market and inflation data consistently higher than expected in the first three months of the year, the forecast was pushed back first to June and now to September.

Jobless claims renewals announced next week will provide more clues about the state of the labor market in April. Jobless claims, a measure of hiring, rose by 2,000 to 1.812 million in the week ending April 6.

Although it is still low by historical standards, a slight increase in renewals suggests that some unemployed workers may take longer to find new jobs

Fed policymakers agree that there is "no rush" to cut interest rates

Fed policymakers are reaching a consensus that there is no rush to cut interest rates in the short term, as inflation is slow and volatile and the U.S. economy remains strong.

Mr. Williams, the New York Fed president, is the latest policymaker to endorse the view that there is "no rush" to cut rates, a view made by Fed governor Paul Waller in February and echoed by many of his colleagues.

Given the strength of the economy, "I have absolutely no sense of urgency to cut rates," Mr. Williams said at the Semafor World Economic Summit in Washington. "I think eventually rates need to be cut at some point, but the timing depends on how the economy performs."

In comments late on Wednesday, Ms. Mester, the president of the Cleveland Fed, also said the Fed might cut rates "at some point" but did not use the phrase "later this year" that she and Mr. Williams have used previously.

Speaking in Florida on Thursday, Mr. Bostic, the president of the Atlanta Fed, said he thought the first rate cut could be "by the end of the year" and said "I am willing to be patient".

Minneapolis Fed President Kashkari reportedly told Fox News that he also wanted to be "patient" and that the first rate cut was "probably" not appropriate until next year.

Federal Reserve Bostic: Open to rate hikes if inflation stalls

Atlanta Fed President Robert Bostic said Thursday that if inflation does not continue to move towards the Fed's 2 percent target as he expects, then Fed officials will need to consider raising interest rates.

"If inflation progress [slowing momentum] stalls or even starts to move in the opposite direction, away from our objective, I think we will have no choice but to respond to that," Mr. Bostic said at the University of Miami.

"I have to be open to a rate hike if our current restrictive level does not appear to be sufficient to meet our goals or get things done."

Progress towards the Federal Reserve's 2% inflation target has slowed in recent months, and Federal Reserve officials have generally said that means they are likely to keep interest rates at current levels for longer without rushing to cut them.

Bostic himself has embraced this view, and he now expects to cut rates once in late 2024, rather than twice as he had previously expected when inflation was falling faster.

On the other hand, Mr. Bostic said, if inflation falls faster than he now expects, "maybe we will cut rates earlier" to ensure policy is not too restrictive.

He said the risks to the outlook were "roughly balanced".

At 08:09 Beijing time, spot gold was quoted at 2376.75 US dollars per ounce.