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Gold sell-off far from over

2022-07-18

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Gold prices have struggled to gain acceptance below the $1,700 mark. Gold was unable to find any meaningful support, suggesting that risks remain skewed to the downside. The recent sell-off may be far from over. Any attempt to recover is likely to encounter resistance near $1,725-$1,726. International gold prices continued their previous weakness and fell to an overnight low of $1,697.53 an ounce since August 9, 2021, as the continued surge in the dollar and concerns over expectations of more aggressive Fed rate hikes weighed on demand for gold.

The US June CPI report and the PPI report undoubtedly echo each other, clearly showing that high inflation remains high. If June is not yet the peak inflation, then the situation in July and August may be even worse, after the market generally believed that the peak in May. High inflation at this level is sure to force the Fed to act urgently, making its already aggressive stance of lowering inflation more aggressive.

The Fed has long placed its focus on inflation over economic growth, and curbing inflation is currently the Fed's top priority. In order to suppress inflation, the Fed risked pushing the U.S. economy into recession. After the inflation data, traders hinted that the Fed is likely to raise rates by a full percentage point at the July FOMC meeting. After that, the Fed will raise rates by 75 basis points at its next FOMC meeting in September. Although Fed officials have since cooled such expectations.

Rising inflation could be bullish for gold, but in the current environment, stubbornly high inflation means the Fed will be more hawkish. As long as the Fed keeps raising rates, markets don't see inflation as a long-term problem. The U.S. central bank is considering more aggressive rate hikes amid the growing risk of a U.S. recession, a sign the central bank is prioritizing fighting inflation.

The world's largest gold ETF-SPDRGOLDTRUST holdings report shows that as of July 15, 2022, the total gold inventory (tons) decreased by 2.61 tons to 1014.28 tons, with a total value (USD) of $55628110670.07. Spot gold fell about 2.14% this week, a slowdown compared to last week's 3.63% decline, but this was the fifth consecutive weekly decline in gold prices, which refreshed the intraday low since the week of August 13, 2021 to $1,697.53.

The World Gold Council officially launched the "Gold 247" program, the vision of which is to help transform the global gold market to meet the challenges brought about by the new demands of today's consumers and investors. The current way of trading gold and managing the supply chain requires continuous improvement to ensure that the gold market continues to live up to the expectations of end users, the financial services industry and regulators.

The global market transformation of "Gold 247" includes three major initiatives: integrity, accessibility and tradability, relying on the digital development of gold and the digital transformation of gold market infrastructure. "Gold 247" aims to strengthen the market's trust in gold, thereby releasing a large amount of demand.

The gold daily K-line chart shows:

The bearish momentum remains volatile and the downward trend is good, and the decline shows no signs of stopping. The top suppresses focus on the vicinity of 1744, the low-level support focuses on the vicinity of 1667, the MACD indicator remains in the bearish area and maintains a volatile downward trend, and the RSI indicator is at the low level of the bearish area. 15 The balance line hovers on the side , as shown in the figure:

[Disclaimer] This article only represents the author's own point of view and does not constitute any investment advice. Please read it for reference only, and bear all risks and responsibilities.

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Gold sell-off far from over

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