The Federal Reserve Raises Interest Rates, But Its Position Is Unexpectedly Biased Towards Doves

The past week can be summed up in the following words: the long-awaited third interest rate increase has come, but it is not as powerful as the emerging dove school; The Dutch populist Wilders fell, but Le Pen, the "most dangerous woman", stirred up the trouble; The Brexit Act was finally passed, but a Scottish "divorce" came; The Bank of Japan, Switzerland, Norway and other central banks chose to stay put, but the Bank of England unexpectedly flew out an "eagle". In the midst of so many "buts", investor Very frustrated. However, the most disappointing thing is that the hawks of the Federal Reserve seem to be like withered eggplants.

On Friday, the price of gold futures for April delivery on the New York Mercantile Exchange rose by 3.10 dollars, or 0.3%, to 1230.20 dollars/ounce, the highest closing price since the beginning of March. The gold price rose about 2.4% in the whole week, the biggest weekly increase since February 3. Silver futures for May delivery rose 8.3 cents, or 0.5%, to close at 17.413 dollars/ounce. Silver futures prices rose 2.9% in the week, the largest increase since the beginning of January.

Before the rise after the Federal Reserve raised interest rates (in the early morning of March 16), hedge funds and fund managers were aggressively reducing net long positions in gold, silver and copper for layout. The position report of the U.S. Commodity Futures Trading Commission (CFTC) for the week ended March 14 showed that speculators cut their net long positions in gold and silver for two consecutive weeks, with net long positions in gold plummeting to the lowest level in more than two months, while net long positions in silver fell to the lowest level since the beginning of February.

After the interest rate increase, the Federal Reserve showed a dove like attitude, causing the dollar to plummet, gold and silver to soar, and the short sellers were undoubtedly hit hard. This week, several important officials, including Federal Reserve Chairman Yellen, made speeches. It is expected that dollar And the gold and silver market will face another round of sharp fluctuations.

Moreover, the survey showed that gold traders and analysts turned to bullish gold prices this week, with the highest bullish level in two months, because the Federal Reserve seemed to release dove signals after raising interest rates. The weekly survey of Kitco, a precious metal website, also shows that Wall Street professionals and ordinary investors expect gold to continue its rising trend after the resolution of the Federal Reserve this week, and the respondents' views on gold have reached an unprecedented consensus.

Although the news of the Federal Reserve and European geopolitics dominated the headlines last week, in fact many traders began to make bets based on Trump infrastructure and tax reform and other stimulus plans. The topic of whether the expiration of the US debt ceiling will affect these stimulus plans has also attracted market attention.

Last week Trump released the preliminary budget for the 2018 fiscal year, which proposed that all government departments carry out "historic budget cuts". The Environmental Protection Agency and the State Council became the two main targets of budget cuts. Goldman Sachs pointed out in particular that the budget blueprint did not disclose the path of fiscal stimulus or economic expectations, nor did it mention tax reform or infrastructure plans, which are the information that the market is most concerned about.

　　Hebba Therefore, Investments Gold price The position of the trend has changed from neutral to bullish. The fund said: "At present, there are big differences within the Congress on the budget, and some Republican members who originally supported Trump are also starting to make a difference. As the event progresses, Congress will certainly require a substantial revision of the budget. At that time, the originally optimistic stock market will be frustrated, and in the long run, funds will flow back to the safe haven asset gold."

In addition, since Trump took office, the topic that the United States may start a global trade war has also caused market concern several times. According to Jin Shi's previous report, in the G20 Summit just past, due to the non cooperative attitude of the United States, the joint statement after the meeting deleted for the first time the content of "opposing protectionism and taking action to combat climate change". Industry insiders believe that Trump's comments on trade protectionism are worrisome, and such concerns will support safe haven gold.

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