A few days ago, the Indian government announced that India will impose a 20% tariff on the export of various types of rice from the 9th. At the same time, the Indian Ministry of Commerce stated that the export of broken rice is prohibited. India’s move is to ensure the stability of its domestic food prices, but given that India’s rice exports account for a very high proportion of global rice trade, India’s increase in tariffs means that food-stressed countries will face more pressure, and food prices may rise further.
In the Asian session of this trading day, gold futures opened at US$1,719.6/oz, the highest reached US$1,736.5/oz, and the lowest touched 1,719.4 yuan/oz. As of press time, it was tentatively reported at US$1,735.8/oz, an increase of 0.91%.
Gold Futures
Gold futures fell to $1,713 yesterday due to Powell’s remarks, but rebounded today and returned to above $1,730, and now barely touches $1,735. From the 1-hour chart, the green kinetic energy column has shortened to disappear, the red kinetic energy column has appeared, and the bulls remain strong.
Fundamental focus
[India restricts rice exports or exacerbates global food tensions]
Data released by India’s agriculture ministry in the middle of last month showed that the country’s total rice acreage fell by 12 percent. Due to below-average rainfall in key rice-producing regions, the area planted to rice in India fell short of the same period last year. In addition, due to factors such as inflation, domestic rice prices in India have risen to the highest level in recent years. Raising rice tariffs can ensure stable domestic grain prices in India and help to calm the upward pressure on domestic rice prices in India.
It should be noted that India’s rice exports account for 40% of the global rice trade, which means that the global market will be greatly affected. The conflict between Russia and Ukraine and extreme weather have threatened the global food supply, and India’s actions will undoubtedly exacerbated the food crisis in some countries. Himanshu Agarwal, executive director of Satyam Balajee, India’s largest rice exporter, expects India’s rice exports to drop by at least 25 percent in the coming months as the tariffs take effect. This will put more pressure on food-strapped countries.
[Institutions raise expectations for Fed rate hikes]
According to a report by Nomura economists led by Aichi Amemiya, the Fed is expected to raise interest rates by 75 basis points this month and another 50 basis points at its November meeting, both 25 basis points higher than its previous forecast. basis point.
Economists say rhetoric from FOMC participants in recent weeks points to increased urgency for the U.S. to increase the pace of rate hikes and raise the overall level of interest rates more forcefully to combat persistently above-target inflation .
It is not only economists at Nomura who raised their expectations, Goldman Sachs, Bank of America and other institutions have also raised their expectations. The Fed’s recent “eagle sound” has almost convinced the market that the Fed will raise interest rates by 75 basis points in September.
Gold futures market outlook
Gold futures briefly tested resistance at $1,740 an ounce yesterday before slipping. Gold futures need a strong break above $1740-1750/oz to target $1780/oz. For now, the downside for gold futures appears to be limited to $1,700 an ounce.