On Thursday (July 20) in Asia, spot gold rose in shock, once hitting a new high since May 17 to $1,986.09 / ounce, and is currently trading near $1,984.86 / ounce, as the market bets that the Federal Reserve may soon end the interest rate hike cycle, the US dollar index gave up overnight gains, giving gold prices momentum. Focus on the key position of the 50% retracement of 2079-1892 at 1985.93, if the position is firmly established, the gold price may further rise above the 2000 mark.

Edward Moya, senior market analyst at OANDA, said: "The market is very confident that rate hikes are coming to an end and inflation has slowed. After the Fed meeting, if the market believes that the Fed will no longer remain extremely hawkish, gold could reach $2,000."

The Fed is expected to raise its benchmark overnight interest rate by 25 basis points on July 26, according to a Reuters poll, which most economists believe will be the last hike in the current tightening cycle.

CME's Fedwatch tool showed the market expects the Fed to raise rates by 25 basis points at its meeting next week and then hold them in a range of 5.25 percent to 5.5 percent, with a rate cut expected in 2024.

In addition, the UK inflation forecast in June was less than expected, the European Central Bank officials made dovish remarks, the market on the Bank of England and the European Central Bank hawkish expectations have cooled, which is also biased to support gold prices.

In addition, Russia's withdrawal from a Black Sea grain export deal also added some risk aversion, lending support to gold prices. However, continued gains in U.S. stocks have weakened safe-haven demand for gold.

Investors will keep a close eye on U.S. initial jobless claims for the week ended July 15, due later on Thursday, which are expected to rise to 242,000 from 237,000 in the prior week.

U.S. single-family housing starts fell in June, even as building permits rose to a 12-month high

U.S. starts on new single-family homes fell in June, but building permits rose to their highest level in 12 months, supporting new home construction amid a severe shortage of previously owned homes for sale.

The Commerce Department reported on Wednesday that housing starts fell in June, partially offsetting an unusually large 18.7 percent increase in May, when single-family housing starts hit their highest level in 11 months.

However, builders' efforts to speed up home construction have been frustrated by shortages of materials such as transformer equipment and higher borrowing costs. Housing completions fell in June, and the inventory of single-family homes under construction also hit its lowest level in two years.

Mark Palim, deputy chief economist at Fannie Mae, said: "The level of single-family housing starts remains strong, and given the continued upward trend in building permits, we believe they are likely to remain strong in the near term." If the economy continues to expand in the coming quarters, we believe housing starts have the capacity to move toward a 1 million unit annual rate, with demand remaining ample given the ongoing shortage of existing homes for sale."

Single-family housing starts, which make up the bulk of housing construction, fell 7.0 percent to a seasonally adjusted annual rate of 935,000 units in June. May's reading was revised up to 1.005 million units, the highest level since June 2022, from 997,000 units previously. Housing starts in May were likely boosted by unseasonably warm and dry weather.

Single-family housing starts fell in the Northeast, Midwest and densely populated South in June, but surged 4.6 percent in the West. The supply of single-family homes remains well below pre-pandemic levels, which will support construction in this segment.

High mortgage rates have pushed some potential home buyers out of the market, and rental demand has fueled strong growth in the multifamily market, but that boost appears to be waning. Apartment vacancy rates are rising and the stock of multifamily homes under construction is at a record high, which could hinder new construction.

Starts on homes with five or more units fell 11.6 percent to an annual rate of 482,000 units, the lowest level since December.

Both single-family and multifamily housing starts fell, and overall housing starts plunged 8.0 percent in June to an annual rate of 1.434 million units. Economists polled by Reuters had forecast housing starts falling to a 1.48 million-unit pace.

With the average rate on the popular 30-year fixed mortgage already near 7 percent, according to mortgage financier Freddie MAC, an expected rebound in the housing market could be curbed. Residential investment has contracted for eight straight quarters, the longest streak of contraction since the bursting of the housing bubble triggered the Great Recession of 2007-2009.

"Reports continue to suggest market stabilization," said Murat Tasci, an economist at jpmorgan. "We expect the drag from residential investment to dissipate gradually as this stabilisation continues."

Single-family home building permits increased 2.2 percent in June to an annual rate of 922,000 units, the highest since June 2022.

Permits for homes with five or more units plunged 13.5 percent to an annual rate of 467,000 units, the lowest level since October 2020. The rental vacancy rate rose to a two-year high in the first quarter, which could limit more new multifamily construction.

Overall building permits fell 3.7 percent in June to an annual rate of 1.44 million units. Homes that have been approved but not yet started fell 2.1 percent to an annual rate of 281,000 units. The backlog of single-family home construction increased 0.7 percent to 141,000 units, while completions of single-family homes fell 2.8 percent to an annual rate of 986,000 units.

The inventory of single-family homes under construction fell 0.9 percent to an annual rate of 688,000 units, the lowest level since June 2021. The inventory of multifamily homes under construction increased 0.7 percent to an annual rate of 977,000 units, the highest level since the government began tracking the data series in 1970.

Treasury yields fell after lackluster data on housing starts

The yield on the 10-year Treasury note fell on Wednesday after the release of June housing starts, but remained above its lowest level in a month as investors bet the Fed's rate-hiking cycle is nearing its end.

The 10-year yield fell 4.5 basis points to 3.744 percent on Wednesday after hitting an eight-month high of 4.094 percent on July 7.

The yield on the two-year note edged up 1.1 basis points to 4.763 per cent on Wednesday after briefly falling after the housing starts data were released in the morning. But it remains below 5.120 percent, the highest since June 2007, hit on July 6.

The two-year / 10-year yield spread was negative 102.4 basis points, widening the curve inversion.

"Yes, there was a little bit of a downside compared to the previous month, but our pace of housing starts is still impressive given where interest rates are," said Guy LeBas, chief fixed income strategist at asset management firm Janney Montgomery Scott.

While there are mixed views on the Fed's rate hike path for the rest of the year, market participants mostly expect the central bank to raise rates by 25 basis points at its July 25-26 meeting next week.

"I think it would have to be something pretty dramatic for them to move in September," said Eric Winograd, director of developed market economics research at Alliance Bernstein.

Other market participants favored the possibility of further rate hikes before the end of the year.

"The persistence of core inflation is likely to keep the Fed on track for rate hikes at least through July and perhaps one more after that," said Lou Brien, market strategist at DRW Trading Group in Chicago. "In that sense, the 10-year will benefit from the Fed's more aggressive approach."

The next major data point for market participants will come on Thursday with the latest existing home sales and jobless claims data, which Winograd believes are unlikely to influence the Fed's interest rate decision next week.

"There's nothing to suggest that we're going to see dramatic changes," Winograd said. "The reading is off the low...... Consistent with the view of a gradual rebalancing of the Labour market."

In terms of the dollar index, although the dollar index rebounded 0.3 percent to near a one-week high on Wednesday, this was partly because the pound was weighed down by the inflation data, which in turn supported the dollar's gains. In Asian trading on Thursday, the dollar index reversed most of the overnight gains, as of 10:10, is currently down 0.24%, trading around 100.04, overall, is still relatively weak.

The IMF said Russia's withdrawal from a Black Sea grain export deal could exacerbate global food price rises

The International Monetary Fund (IMF) said on Wednesday that Russia's withdrawal from a deal allowing Ukraine to export through the Black Sea risks exacerbating global food insecurity and could drive up food prices, especially in low-income countries.

An IMF spokesman said the agency would continue to closely monitor developments in the region and their impact on global food security.

"The termination of the agreement affects countries that rely heavily on Ukraine for food supplies, particularly in North Africa, the Middle East and South Asia," the IMF said. "It worsens the outlook for food security and has the potential to fuel global food inflation, particularly for low-income countries."

According to the IMF, the Black Sea grain export agreement has played an important role in facilitating Ukraine's exports of food, grains and fertilizers to the rest of the world. The spokesperson noted that with the lifting of the export ban and higher than expected grain production in major exporting countries, the agreement has helped ease pressure on international food prices.

Goldman Sachs 'second-quarter profit plunged more than 60 percent as its consumer business shrank and the value of its investments fell

Goldman Sachs 'second-quarter profit plunged more than 60 percent as a shrinking consumer business and a decline in the value of its investments hammered the Wall Street giant. The bank wrote down $504 million on its GreenSky business and $485 million on its consolidated real estate investments.

The bank on Wednesday reported earnings of $1.07 billion, or $3.08 per share, for the quarter ended June 30, compared with $2.79 billion, or $7.73 per share, a year earlier.

Greensky, which provides home improvement loans to consumers, was acquired by Goldman Sachs in September 2021 in a $2.24 billion stock deal that closed a year earlier.

Revenue at Goldman's asset and wealth management division fell 4 per cent from a year earlier, hurt by losses on real estate investments.

The results capped a strong quarter for big US banks. The earnings report pointed to the economy's resilience, but also added to evidence that high borrowing costs will start to weigh on loan demand later this year.

Investment banking fees fell 20 percent to $1.43 billion in the second quarter. Fixed income, currencies and commodities trading revenues were down 26 per cent, while equities trading revenues were roughly flat.

The Fed's 10 consecutive rate hikes have destabilized the economy, and many executives expect a slowdown in the second half of the year. This prevents the M&A market from coming back to life quickly, even if it starts to show some signs of recovery.

Analysts are optimistic that a continued recovery in the stock market will encourage trading and prompt more companies to go public in the coming months. Uncertainty over the trajectory of the economy remains an obstacle, however, with global M&A activity down 36 percent in the second quarter from a year earlier

ECB Governing Council Stournaras: Next week's rate hike is enough, further tightening could hurt the economy

ECB governing Council and Greek central bank governor Yannis Stournaras said in an interview on Wednesday that another 25 basis point rate hike by the ECB should be enough and that further tightening could hurt the economy.

The ECB raised interest rates to a 22-year high at its June 14-15 meeting and said it was almost certain to raise rates for the ninth time in a row in July, as it forecast inflation would remain above its 2 percent target until the end of 2025.

"We may raise rates by another 25 basis points next week, but I'm not sure we'll go further after that," Mr. Stournaras said. I think that's my point."

Stournaras is considered a dove on the ECB's 26-member governing council.

Asked what arguments could be made in favor of stopping the rate hikes rather than raising them further, Mr. Stournaras said, "Inflation is coming down, and we've found that we're at the point where further rate hikes could hurt the economy at its best."

Traders and analysts expect the ECB to raise its benchmark interest rate by 25 basis points to 3.75 percent at its next meeting on July 27.

ECB governing council Nault said Tuesday that a rate hike after July was "at best a possibility, but by no means a certainty."

UK data: Inflation slowed sharply to 7.9% in June, easing some pressure on the central bank to raise interest rates

British inflation fell more than expected to 7.9 percent in June and was the lowest in more than a year, official data showed, easing some of the pressure on the Bank of England to continue aggressively raising interest rates.

The Office for National Statistics said the year-on-year rise in consumer prices in June was the slowest since March last year, but still higher than in many large rich economies. Economists had expected CPI inflation to slow to 8.2 per cent in June from 8.7 per cent in May, further away from October's 41-year high of 11.1 per cent but still well above the Bank of England's 2 per cent target.

The Bank of England said in May that it expected inflation to fall to 7.9 percent in June.

Core inflation also fell more than expected, to 6.9 per cent from 7.1 per cent in May, which tied with its highest reading in more than 30 years. Core inflation, which excludes items such as food, energy, alcohol and tobacco prices, is closely watched by the Bank of England to gauge underlying price pressures. Economists had expected core price increases to be unchanged at 7.1 percent.

Food inflation slowed to 17.3 per cent from 18.3 per cent in May and remains a significant strain on the finances of many households.

The Bank of England is expected to raise interest rates for the 14th consecutive time on August 3, having already raised its benchmark rate from 0.1 percent in December 2021 to 5 percent in May this year.

Prime Minister Sunak pledged earlier this year to halve inflation by the end of 2023, ahead of a national election in 2024, a target finance Minister Jeremy Hunt has described as challenging.

The opposition Labour Party, which is topping opinion polls, has accused Sunak's Conservatives of presiding over a "mortgage disaster" as borrowing costs for home owners are soaring.

The Dow closed higher for the eighth straight day, its longest winning streak in nearly four years

U.S. stocks the Dow Jones Industrial Average and the S&P 500 closed slightly higher on Wednesday, with the blue-chip Dow gaining for an eighth straight day as investors assessed the latest round of corporate earnings, but a drop in Microsoft led the Nasdaq to close nearly flat.

Banks extended gains, with the S&P 500 bank index climbing 1.70 percent for its third straight day of gains and eighth in the past nine sessions.

Goldman Sachs Group Inc. rose 0.97 percent after reporting its lowest profit in three years, but Chief Executive Officer David Su struck an upbeat tone, citing signs of recovery in investment banking. That echoed what other big banks said Tuesday.

Kim Forrest, chief investment officer at Bokeh Capital Partners, said, "Right now, we're seeing a lot of smart companies that started moving to more reliable fee income years ago, and that's what people have in mind." Banks are showing you what's going on in the business."