The FOMC minutes will weaken the three reasons for raising interest rates or support the price of gold.

China Gold Network reported on February 24th that it was reported that the early morning gold market relied on the meeting of the monetary policy minutes last night to achieve a counter-attack and continue to rise. The minutes of the Fed meeting lowered expectations for a rate hike in March, and the yields of the US dollar and the US dollar continued to fall. Gold rose to a new high on November 11. As of now, spot gold prices have traded at 1256.57, up 7.01, a decrease of 0.56%. At present, the FOMC minutes and the Fed's interest rate policy, gold price demand and positions have increased and the trend and the European political crisis has intensified the price of gold.

FOMC Minutes Meeting and Federal Reserve Interest Rate Policy

International spot gold rose nearly $15 on Thursday (February 23), the biggest gain in the year. The minutes of the Fed meeting lowered the expectation of interest rate hike in March. The yields of the US dollar and the US dollar continued to fall. Gold rose to a new high on November 11. The US Treasury secretary said that he was not ready to judge China's exchange rate behavior. The market focused on the first month of Trump. The State of the Union address sent more signals. The FOMC record weakened expectations of interest rate hikes, and the price of gold rose by $15 to break 1256.

Gold rose 1.1% on Thursday, the biggest gain since February 6. After the Asian market opened at 1,234.40 US dollars / ounce in early trading, gold fell into a consolidation. After the European gold price gradually increased, the violence rose sharply. After recording an intraday high of $1251.14 per ounce, the gains have fallen back to close at $1,248.80 per ounce.

French Industrial Bank 601166, shares the company's Robin Bhar said: "The dollar fell, the bond yields fell, providing some support for gold, the foreign exchange market, bond market and gold will look for guidance from Trump's speech on Tuesday."

The minutes of the Fed meeting released on Wednesday have weighed on the market's expectation that the Fed will raise interest rates. Investors cut their expectations for a rate hike in March, lowering US Treasury yields and weighing the dollar.

For a basket of currencies, the US dollar index fell 0.5% overnight, from above 101.60 to around 100.80. The euro rose 0.2% against the dollar to 1.0581. The dollar fell 0.5% against the yen to 112.62. The US dollar fell 1.2% against the Mexican peso to 19.66, the lowest level since the US presidential election.

US Treasury yields fell further, with benchmark 10-year Treasury yields closing at 2.388% for two-week lows and 2.416% on Wednesday.

The market is paying close attention to the first State of the Union address submitted by US President Trump on February 28. Investors are looking forward to the details of the tax reform plan and infrastructure plan. Trump promised this month to give a tax reform plan within a few weeks.

After the minutes of the meeting, the market lowered the Fed’s short-term interest rate hike expectations. US federal funds rate transaction data shows that the market expects the Fed's probability of raising interest rates in the March meeting to fall to 34% from 38% before the release of the minutes of the meeting, and the rate of interest rate hike in June fell from 78% to 74.6%, raising interest rates in September. The probability dropped from nearly 89% to 87.4%.

El-Erian, chief economic adviser of Allianz, said that the minutes of the Fed meeting and recent data indicate that the market's implicit possibility of raising interest rates in the Fed in March seems too low, and 50%-60% seems to be more appropriate. For now, the US employment report for February will significantly affect the Fed's consideration of one or other actions at the March meeting, but the outlook depends on salary growth.

The market is currently weighing whether the Fed will raise interest rates. A number of high-ranking officials believe that if the economy is on track, future employment and inflation data are in line with or better than their expectations, and even there is a risk of exceeding the Fed's employment and inflation targets. The pace of interest rate hikes may be relatively quick. However, several senior officials also said that they are still worried about the economic downside risks associated with the possible further appreciation of the US dollar.

Gold price demand and positions have increased or decreased

On Thursday, the gold bulls regained their power after nearly two weeks of repairing. The spot gold price rose sharply in the session, refreshing the high point since November 14 last year. As of press time, the highest price in the gold price has touched $1249.05 per ounce, and the biggest increase in the day is over 0.9%.

The price of gold showed significant seasonality, mainly boosted from early November to mid-February; during this time, Indian Diwali, Christmas and Lunar New Year stimulated the demand for jewelry in India, the United States and China; More than two-thirds of the world's gold jewelry consumption.

According to the average data from the World Gold Council over the past seven years, we can see a clear picture: jewelry buyers significantly increased their purchases in the fourth quarter, ETFs and funds adjusted their positions at the same time to match the rising Demand.

Only investment funds increase their gold purchases in the second quarter of the year.

It is reported that the remaining participants in the market continue to surf between the tides of gold prices, pushing demand to above the quarterly average of 1,103 tons in the three months before the end of March, exceeding the average of about 25 tons. By the beginning of April, almost all of the gold market's purchasing power was weak, resulting in a total purchase volume of 23 tons lower than the average.

The second quarter's decline will begin before the end of March. If you buy gold in early January and sell it after 1 month, the average return over the past 10 years is 4.2%. The yield of the February transaction was 2.3%, but the average decline in March was 1.5%. The low season of gold began from this point until the gold price in August was able to recover the decline.

However, the strategy of holding gold for a longer period of time does not work very well. The weak gold price between March and June tends to dig up the investment position, making it difficult for investors to pick up the gold price without any loss.

Congratulations to investors who have done more gold at the end of last year: you will enjoy a golden bull market for a few months. Those who try to join the multi-team should note that the prospect of the Fed may raise interest rates three times this year has not disappeared, and the probability of a rate hike in May is as high as 50%.

The US and Europe are in deep debt crisis or hard to return

During this period, U.S. Treasury Secretary Nuchin said in a speech that the absolute level of US debt is worrying. He urged the US Congress to lift the debt ceiling so as not to face the "last minute" problem again.

Nuchin believes that the strong performance of the dollar may indeed have some problems. When this statement came out, the US dollar index quickly erased the intraday gains and became the direct driver of the sharp rise in the gold market.

Every day, Chinese people pay attention to the US President Trump’s “tweet to govern the country” and “administrative order to rule the country”, or should not ignore the hidden dangers brought by Europe. In particular, it should pay more attention to Greece or the debt crisis will re-emerge. The multiple impacts brought to countries around the world, including China.

Greece’s two-year bond yields have once reached 10% in recent days, the highest level since June last year.

The main cause of the soaring yield of government bonds is that the International Monetary Fund (IMF) has recently issued a serious warning to Greece’s debt problem that Greece’s fiscal surplus is unlikely to reach the target of euro zone creditors, and Greece’s debt may increase explosively. After that, there will be some shock in the global financial market, and it may even turn into a "Brexit". German Finance Minister Wolfgang Schaeuble also issued a statement that if Greece wants to cut Greece's debt, then Greece must withdraw from the euro zone.

More seriously, I believe that even if the EU is willing to provide a debt relief for the Greek "grandfather" to delay the time of the Greek debt crisis, the debt problems of the EU countries such as Greece and the Netherlands have been difficult to return. And there has always been a "Brexit" heart, which is undoubtedly pushing the euro currency alliance to the edge of the cliff, so that the euro zone will soon fall apart, and then will further hit the global financial market including China.

European political crisis

This year is the year of European elections. The Netherlands, France and Germany will hold general elections. The Netherlands will hold congressional elections on March 15th, followed by France on April 23 and May 7.

Le Pen, the presidential candidate, said earlier that if she was elected president, she would lead France out of the euro zone. Deutsche Bank said that the use of the Brexit referendum as a template to create a "Frexit" will have disastrous consequences. “France’s departure from the euro zone is a tragedy for the euro zone and suicide for France.”

According to the French OPINIONWAY poll, it is expected that the French far-right presidential candidate Le Pen support rate will be 26% in the first round of voting, the independent candidate Mark Long is 23%, and the right-wing candidate Fei Yong is 21%.

In addition, the French OPINIONWAY poll also pointed out that if entering the second round of elections, Fillon will beat Le Pen at 58:42; Mark Long will beat Le Pen at 61:39.

Valentin Marinov, currency strategist at Crédit Agricole, wrote in the report that if Le Pen wins in the French election, the euro/dollar may fall by nearly 8%. And pointed out that continue to bearish on the euro, insist on shorting the euro / dollar and the euro / yen. If the Dutch Liberal Party wins in the country's election, the euro may fall by 5%.

Under the pressure of the euro's continuous selling in the past few years, as the euro has now reached 1.05 near the dollar, and this year, many European countries are facing the election year again, the uncertainty of the political prospects in the euro zone is already dark. The rapid rise in the land has also led economists to expect that the analysis of the euro against the dollar in 2017 will be endless.

Although the market currently estimates that the opportunity for French populist leader Le Pen to win the French election is not high, the euro foreign exchange market is still widely affected by the rise of political uncertainty, especially in recent years, Western countries have experienced Brexit and Trang. The selection of the generals, etc., shows that the current populism in the Western countries is on the rise.

At present, the political risk in the Eurozone has become the focus of the market. The French election shows that the extreme right-wing Le Pen support rate is rising, which is pushing up the market risk aversion. Former Italian Prime Minister Renzi resigned as the leader of the ruling Democratic Party. This may sound an alarm, meaning that a formal political party split is underway. In addition, Greece’s third round of bailouts has not been issued, and the threat of the Greek debt crisis still exists.

In the future, can EU member states eliminate the uncertainty caused by the general election of member states, can the EU gradually let the market absorb the risks brought by Brexit, and whether the European Central Bank can properly handle and handle EU monetary policy and exchange rate fluctuations, etc. Or become the key to dealing with political risks in the future, gold prices continue to rise with international political risks.

According to the China Gold Network market software, at 19:16 Beijing time, the spot gold price traded at 1256.57, up 7.01, a decrease of 0.56%.

(Editor: HN666)