This week, we saw interesting prices in the global markets. Let’s first recall the important data for announced growth this month:
- The US manufacturing PMI, which fell below the 50 threshold in November, fell to 48.4 in December, the lowest level since the pandemic.
- The non-manufacturing PMI fell into contraction territory at 49.6, the weakest level since the pandemic.
- The export price index fell 2.6% in December, marking the largest decline since July.
- Retail sales fell 1.1%, the weakest month in a year.
- Industrial production fell 0.7% month-on-month, the sharpest drop since September 2021.
- Industrial output fell 1.3% month over month to its lowest level since the pandemic.
- The manufacturing index has been negative for 5 months.
- While this data is negative for growth, the positive data is as follows;
- The confidence index reached its highest level after April.
- Weekly claims for unemployment benefits fell below 200,000, the lowest level since September.
- The decline in non-farm payrolls was less than expected, as the rate of increase in wages slowed.
- There was a decline in the producer price index and the consumer price index.
When we evaluate the data that affects both inflation and growth together, we come to the following conclusion: The effect of the interest rate hike is starting to show, and world energy prices are at low levels in the same period. There is no sharp decline on the food side. According to the FAO report, the end of 2022 was lower than the beginning of the year, but food prices in countries continue to rise.
On the growth side, obviously production has slowed down, demand is starting to drop and sales are down accordingly. Recent data shows a drop more than expected.
The interesting point is the difference between the bodies and the market.
Markets increased risk appetite this week by buying lower inflation first. Then growth came first and pricing stagnated due to the weak data that came on top. This is not the only reason for the decline in the last two days in stock markets, which rose at the beginning of the week.
Federal Reserve Officials Issue a Statement with Possible Two Sides
When markets began pricing in recession, Federal Reserve officials announced that they were not yet entirely convinced of falling inflation. Many think the same about slowly increasing interest rates. But the main point of concern for the markets is whether the interest rate cut will start this year. Therefore, the high inflation data lowered these expectations.
ECB President Lagarde and IMF President Georgieva said in their interview today that the latest data is not as bad as expected.
Developments that will determine pricing in the markets
There is inflation on the one hand and growth on the other. If inflation continues to decline in major economies, especially in the USA and the Eurozone, risk appetite in the markets will gradually increase. The evolution that could prevent that would be the effect of growth data. If the indicators are lower than expected, the unease may return again. A good scenario is that data will recover while inflation will fall. This possibility will create an expectation that the rate-cutting cycle will be delayed.--
How is he affected by these prices?
With lower inflation and convincingly better data, the price of an ounce of gold rose to $1,936. However, with the optimistic pronouncements that we talked about, gold has fallen from a peak of $1,925 today. However, even these levels are not a risk to the bullish enthusiasm for gold.-
A weekly close above $1,920 will boost the possibility of reaching $1,980 in the near term. If I had to repeat, protecting the 1.876-1.845 range during the dips that we might see might just be a respite for gold to develop more healthily.
Gold ounce chart
The price that advanced to the resistance 1.177 TL, which I saw at a record-breaking level of 1.171 TL today. Despite the dollar’s poor performance in global markets, the Turkish lira/rate may show some movement in the near future. In this framework, we can take into account factors such as the decline in demand for KKM protected deposits, the increase in foreign currency deposits, and the uncertainty about elections. Therefore, purchases may continue to affect the price of an ounce and the exchange rate of the dollar on the price of a gram. I am watching the levels 1.177 TL and 1.215 TL.
Gold gram chart