Home > Dynamic > Under the consolidat...

Under the consolidation of gold prices, the market lacks a sense of urgency

2022-06-27

1373

The market remained in a narrow range last week, which is the continuation of gold's months-long consolidation. The lack of urgency in the market and the stimulation of fresh events kept gold market investors on the sidelines. Gold mainly fluctuates around three major events such as interest rate hike/inflation/recession. Due to short-term uncertainty, lower prices are still buying opportunities. Uncertainty and risk fluctuations will remain the main factors in the current global financial market. feature.

golden vane

Although last week the Fed did not show any intention to weaken its hawkish stance due to the risk of economic recession, the fear of an economic downturn has caused the US dollar index to reach a stalemate, and the price trend of gold has therefore lacked a clear direction. Judging from the short-term trend of the US dollar index, it is entering the end of the triangle, and it may break the deadlock in the later stage, which may boost the price of gold. The price of gold is expected to rebound from the support area near 1820 in the short term.

Under the consolidation of gold prices, the market lacks a sense of urgency

Outlook for this week

Last week, Powell made it clear that the Fed's hawkish stance is still unshakable. In order to curb inflation, the Fed does not hesitate to cause a major risk of economic recession. After the FOMC meeting in June, most Fed officials supported a 75 basis point interest rate hike in July. Even 100 basis points.

Powell's speech suggested that a recession may not prevent the Fed from tightening policy to control inflation. Powell told a congressional hearing that "the commitment to fighting inflation is unconditional, and the Fed will not give up on raising rates when the economy slows without a significant drop in inflation."

Through the interpretation of the disk, we found that since June 15, the support of the US dollar from the Fed's hawkish stance has gradually weakened, and even lost the impact of the boost, making it difficult to form an effective support. Both the U.S. dollar index and gold prices were in turmoil as markets appeared to doubt the Federal Reserve's ability to aggressively tighten policy in the face of recession risks. Last week, the New York Fed's economic forecast model showed that the U.S. economy will contract by 0.6% this year and 0.5% in 2023, a weaker forecast than in March.

Recent U.S. economic data is also fueling recession fears. The initial value of the Markit manufacturing PMI for June released on Thursday was 52.4, lower than the expected value of 56, and refreshed a 23-month low; the initial value of the service industry PMI was recorded at 51.6, lower than the expected value of 53.5, and refreshed a 5-month low. The University of Michigan's Consumer Confidence Index for June, released on Friday, came in at a record low of 50 and missed expectations at 50.2.

With the announcement of the Michigan Consumer Confidence Index on Friday, the U.S. dollar index has pulled back close to the recent triangle range. If the U.S. dollar index is confirmed to fall below 104, it is expected to form an effective support for gold prices. Conversely, if the US dollar index breaks above 104.50, that is, it breaks above the triangle, it will bring a new round of blow to the gold price.

The 1-hour chart of spot gold shows that the price of gold has only rebounded from the support level of 1810 to 1820, which started on May 16. If this level does not fall below, the price of gold may usher in a certain degree of rebound. The watershed of strength and weakness above is at 1835. If this position is broken, the initial target upward can be seen in the 1850-1860 area. On the contrary, if the suppression is obvious under 1835, then continue to pay attention to the support of the 1810-1820 area, and the break below will open up more room for decline

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

CM Trade

As a world leading financial trading platform, CMtrade Provides comprehensive one-stop trading services and opportunities for traders.

[Products]

The platform provides over 32 kinds of popular financial products such as forex, precious metals, crude oil, indices, cryptocurrencies and more.

[System]

2 top trading systems CM Trade MT4 / CM Trade APP, powerful and easy to operate

[Service]

Comprehensive market news, professional market analysis, 7*24 hours online customer service

[Advantage]

Low cost, high leverage, flexible one-stop all day two-way trading.

[Authority]

Licensed and strictly regulated by authorities. Traders deposits are independently kept by the bank. Fast deposit and withdrawal. Fair, efficient and transparent trading environment.

Free Access
Daily Trading Strategy Download Now

CM Trade Mobile Application

Economics Calendar

Under the consolidation of gold prices, the market lacks a sense of urgency

Access to global trading markets anytime and anywhere