Fundamental analysis generally refers to all market news affecting the supply and demand of investment products, its intrinsic value determines the book value of the product price, and the market value will rationally return to the intrinsic value. There are thousands of news in the market, which economic matters should be paid attention to when investing in gold.
In this chapter, we share several market-focused focuses and economic data, including quantitative loose monetary policy, interest rate changes, and Labor Department data.
Quantitative Ease of Monetary Policy
QE, also commonly known as silver printing paper, is the policy that has most affected gold price changes in the past 20 years. After the 2008 financial tsunami and the drag of the new crown epidemic, the global economy fell into depression. In order to rescue the economy, the central banks of various countries implemented quantitative loose monetary policies. The central banks used open market operations to increase the money supply in the local economic environment. The means can be increased The scale of bond issuance, and even the immediate increase in the printing of money, has made the market money loose, so as to solve the short-term financing difficulties of the country or enterprises, the funds will become abundant again, the normal operation and confidence of the market will be restored, and the financial crisis will be solved.
But this move is like a Ponzi scheme, market players are not getting real economic growth, and the additional money printed makes asset prices soar. During the 2008 financial tsunami, the price of gold once hit a record high at the time, rising nearly $2,000. Under the ravages of the new crown pneumonia, the global central banks also joined hands to quantify the easing, and the price of gold also benefited again, reaching a record high and breaking above $2,000. When countries have loose monetary policies, it will definitely benefit asset prices and stimulate inflation. Those who hold assets will definitely outperform those who hold cash, and cash will only be gradually eaten up under inflationary pressure.
Interest rate changes
There are many interest rates in the market, and the interest rate here refers to the official interest rate of the central bank, especially the US federal funds rate. Interest rates bring financing costs to business financing and interest income to savers. An increase in interest rates will cause the price of gold to fall, and vice versa.
The federal funds rate is determined by the Federal Reserve's meeting on interest rates. Some committee members have the right to vote in turn each year. Generally, regular meetings are held 8 times a year, and additional regular meetings or ad hoc meetings may also be held according to needs. In order to control inflation, the Federal Reserve may raise interest rates, increase corporate financing and commercial borrowing costs, and cool down market prices, but if the economy shrinks, the Federal Reserve may cut interest rates to reduce market financing pressure and stimulate personal investment, thereby stimulating economic recovery. .
Interest is inversely related to the trend of gold prices. When the interest rate is lower, the cost of holding gold will be reduced, which will support the gold price. On the contrary, if the interest rate is higher, the cost of holding gold will be greatly increased, which will reduce the demand for gold and make the price of gold fall.
Labor Department Data
The labor market can best reflect the prospects of an economic system, and the global economy is also led by the United States, so the market generally pays more attention to the new non-agricultural jobs in the United States. This data affects the performance of global financial markets and investment products. For example, if the data deviates more than expected, the US stock index may change by more than 3%, or the gold price may fluctuate more than 20 US dollars. Published on the first Friday of every month by the Labor Department, global investors will also pay attention to the relevant figures.
The number is the net increase in the number of new workers. If there is a positive growth, it means that the company is optimistic about the market outlook and needs to increase its manpower. The decline in market demand for hedging will put pressure on gold prices. On the contrary, if the number declines, it means that companies are cutting jobs, and the risk aversion in the market is high, stimulating the price of gold to soar, so the new jobs are inversely proportional to the price of gold. This data is the focus of the monthly market. If you are interested in investing in the gold market, you must pay attention to this monthly data.
other economic data
|Retail sales||Calculate the increase or decrease in overall monthly sales across the country||Announced mid-month by the Department of Commerce at 08:30 AM in the US|
|Gross domestic product||Calculate gross income growth across the country||Sub-preliminary and revised, published by the Department of Commerce at 08:30 AM in the United States|
|Producer price index||Calculate the price index of production in factories, farms, etc.||Published by the Department of Commerce at 08:30 AM in the US before mid-month|
Consumer Price Index
|Calculate market prices||Announced mid-month by the Department of Commerce at 08:30 AM in the US|
|Weekly initial jobless claims||Counting the number of people who filed for unemployment assistance for the first time last week||Published every Thursday by the Department of Labor at 08:30 AM in the US|
Durable Goods Order
Calculate changes in total order value for durable goods manufacturers
Announced by the Department of Commerce at 08:30 AM in the US before the end of the month
|Purchasing Managers' Index||
Divided into manufacturing and non-manufacturing industries, calculate whether the industry is growing, above 50 means growth, below 50 means shrinking
The first business day of each month is announced by the Department of Commerce at 10:00AM in the United States
|New home sales||Calculate the sales rate of new homes||Announced by the Department of Commerce at 10:00AM in the United States at the end of each month or the beginning of the next month|