Spot gold extended its decline to 1% before Tuesday’s U.S. session, losing $1,820 per ounce and retreating more than $20 from its daily high; spot silver turned lower during the day, approaching the $27 mark. The dollar index once fell below 90 for the first time since Feb. 25, but quickly recovered.
21:30, the U.S. stock market opened, the NASDAQ opened down about 2.1%, but less than half an hour later the decline narrowed to less than 1%; new energy vehicles, blockchain sector fell in general, Tesla opened down about 4.8%, the first time since April this year fell below the $ 600 mark; the Dow fell more than 1%. Panic index VIX rose more than 10%.
Financial website Fxstreet analyst Ross pointed out that the past hour gold prices fell through the recent consolidation range, mainly due to a significant rise in U.S. bond yields, prompting the withdrawal of funds from gold. On Wednesday, the United States will release the latest CPI, the market is expected to April unquartered CPI annual rate of 3.6%, the market is worried that the Federal Reserve will tighten ultra-easy monetary policy in advance, so early reaction.
Just before the market movement, former New York Fed President William Dudley warned that although the Fed has promised to be patient in withdrawing support for the economy, it may be too late to raise rates by the time the Fed actually starts to tighten policy. dudley said.
“Once they start, it will already be too late and they will have to play catch-up.”
This is due to the Fed’s decision to deliberately delay raising interest rates until the U.S. achieves full employment and inflation has been above its 2% policy target for some time, according to the new policy framework it adopted last year. He also said.
“When they have to catch up, short-term interest rates will rise much higher than the levels currently reflected in financial markets.”
Druckenmiller, a billionaire investor, held a similar view, arguing that there is a risk that the Fed will wait too long to raise rates, adding that the worst crisis will occur when the bubble bursts.
Druckenmiller said his performance is up 17% this year and 42% last year, “probably thanks to the Fed.” He believes that the current fiscal and monetary policy relative to the state of the economy is the “most aggressive policy” he has seen in a long time. He also said.
“In this market monkey can also make money, there is no doubt that all our markets are in a frenzy.
We did more quantitative easing and bought more U.S. Treasuries in six weeks last spring than we did in the entire period from 2009 to 2018. But the real problem is that the Fed is expected to release another $2.5 trillion after the vaccines land and retail sales are at or even above trend levels. We are still behaving like a black hole.”
As Golden 10 also noted in an earlier article, the 5-year break-even inflation rate, which reflects the spread between inflation-protected and regular bond yields, rose as much as 3.4 basis points to 2.7327% on Monday, soaring to its highest level since 2006. The Nasdaq closed down 2.55 percent on Monday, its biggest closing loss since March 18.
Analysts say inflation in the coming months may depress U.S. Treasury prices, pushing up yields and depressing the share prices and valuations of technology growth stocks, driving investors away from tech stocks.
As for gold, Haresh, an analyst at financial website Fxstreet, expects the 200-day MA (about $1,850 per ounce) in spot gold to limit upside for now until the U.S. CPI is released this Wednesday. The improved outlook for U.S. economic growth, infrastructure plans and epidemic-related stimulus measures have pushed up inflation expectations, and gold, which is seen as a hedge against inflation, is back in focus, with the market still focused on the U.S. CPI this Wednesday. gold’s 200-day MA will be the focus of a long and short battle for the following period.
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