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Market News Dry goods! Two major events have struck, and the price of gold that has oscillated for ten months will usher in a breakthrough this week?
Dry goods! Two major events have struck, and the price of gold that has oscillated for ten months will usher in a breakthrough this week?
In early Asian trading on November 2, spot gold fluctuated in a narrow range near the 1790 mark. Due to market concerns about the Fed's tightening policy, the price of gold stayed in the range for a long time. Two key events this week may determine the trend and price of gold. Some analysts are optimistic that gold and silver will rise in the next six months, and the price of gold is expected to break through historical highs
2021-11-02
11053
On Tuesday (November 2) Asian market in early trading, spot gold fluctuated in a narrow range near the 1790 mark. Investors are waiting for this week's Federal Open Market Committee (FOMC) meeting and October employment report. Due to market concerns about the Fed's tightening policy, the price of gold remained range-bound for a long time. Two key events this week may determine the trend and price of gold. Currently, stocks, real estate and other areas have reached new highs. And West Ratings senior analyst Mike Larson said that the long-awaited rise in gold and silver will appear in the next six months, and gold prices are expected to break through historical highs.
Currently, investors are waiting for two key events this week, which will determine the trend and price of gold. First of all, at 2:00 AM GMT+8 on Thursday, the Federal Reserve will issue a monetary policy statement, and Powell will hold a press conference approximately half an hour after the interest rate decision is announced.
The market expects the Fed to announce that it will begin to reduce the size of its asset purchases of US$120 billion per month. At the last FOMC meeting, the Federal Reserve revealed that they will reduce the purchase scale by $15 billion per month.
Currently, the Federal Reserve has been buying assets, which are divided into US bonds and bills (US$80 billion) and mortgage-backed securities (US$40 billion). It is expected that once they start to reduce the scale of debt purchases, they will reduce their monthly purchases of US Treasury bonds by US$10 billion and reduce their monthly MBS assets by US$5 billion. This means that their reduction in debt purchases will last for 8 months.
However, the Fed did not solve the problem of shrinking the balance sheet. All the reduction did was to reduce asset purchases. During the last recession in 2009, the Fed’s balance sheet swelled to $4.5 trillion. They also cut their balance sheets from 4.5 trillion U.S. dollars to 3.7 trillion U.S. dollars until the Fed believes that further reductions will have an adverse effect on the economy. In the past year and a half, the Federal Reserve has been aggressively expanding its balance sheet. At present, its balance sheet has more than doubled to 8.6 trillion U.S. dollars.
It is also believed that the Fed will not start raising interest rates until the end of the reduction in debt purchases, and the process of reducing debt purchases is likely to end in June or July.
The second key event is GMT+8 Friday at 20:30, the October non-agricultural employment report to be released by the US Department of Labor. The September employment report was far below economists’ expectations and forecasts. The forecast for last month’s employment report is that non-agricultural jobs will increase by 450,000 Americans. However, the actual number only added 194,000 jobs, clearly showing the impact of the delta mutation virus and labor market shortages.
The current forecast for the November employment report is that 450,000 new jobs will be created in October. However, the actual data in the past two months is far lower than expected. In September, the US Department of Labor reported that 317,000 new jobs were created, which was lower than the 400,000 expected by economists surveyed.
Due to market concerns about the Fed’s tightening policy, the price of gold has remained range-bound for a long time, but it has now shown all the conditions for a sharp rise. The asset adjustment cycle is a war between bulls and bears. This situation of alternating long and short dominating the market can last for a long time before it breaks out.
From the Russell index (Russell index), the price of gold has been consolidating for 10 months. Analysts believe that the longer the integration, the greater the ultimate breakthrough. With the key Federal Open Market Committee (FOMC) meeting and the October employment report coming out this week, it may help gold clarify its direction.
Mike Larson, senior analyst at Weiss Ratings, said: “Currently the market is mostly at a high level, real estate is overvalued, and stocks are overvalued. However, the stocks of precious metals and mining companies are still relatively cheap.” What has fallen back is the concern that the Fed will have to take aggressive actions and raise interest rates quickly to curb inflation.
But Larson said: “People will realize in early 2022 that the Fed will not be able to take radical measures. People need to realize that the Fed is facing tremendous political pressure and needs to put employment issues above inflation.”
Larson pointed out: "This tightening cycle will be very different from the previous cycle, and gold and silver will benefit the most. As we enter mid-2022, we will see the next rise in gold and silver, Because people will no longer be so worried about the Fed. Especially if the GDP trend drops a bit, what motivation do they have to raise interest rates significantly?"
Larson's price outlook is quite optimistic. It is expected that gold and silver will reach new highs in the next six months: "The high point of gold and silver that we saw 14 months ago may be surpassed next year. The price of gold is expected to reach US$2200-2400. The US dollar. The price of silver may also follow an upward trend."
On Tuesday (November 2), spot gold fluctuated within a narrow range, trading at around $1790. The first resistance level facing the upside is the 1800 mark. After breaking this key psychological level, the next resistance level appeared at $1836, which corresponds to the high in early September. The current support level starts at the 50-day moving average and is currently fixed at $1782, followed by Friday's low of $1772. Strong support for gold is at $1748 and $1720.
(Spot gold daily chart)
GMT+8 At 09:47 on November 2nd, spot gold was quoted at $1,790.55 per ounce.
The market expects the Fed to start a cut but it is far from raising interest rates
Currently, investors are waiting for two key events this week, which will determine the trend and price of gold. First of all, at 2:00 AM GMT+8 on Thursday, the Federal Reserve will issue a monetary policy statement, and Powell will hold a press conference approximately half an hour after the interest rate decision is announced.
The market expects the Fed to announce that it will begin to reduce the size of its asset purchases of US$120 billion per month. At the last FOMC meeting, the Federal Reserve revealed that they will reduce the purchase scale by $15 billion per month.
Currently, the Federal Reserve has been buying assets, which are divided into US bonds and bills (US$80 billion) and mortgage-backed securities (US$40 billion). It is expected that once they start to reduce the scale of debt purchases, they will reduce their monthly purchases of US Treasury bonds by US$10 billion and reduce their monthly MBS assets by US$5 billion. This means that their reduction in debt purchases will last for 8 months.
However, the Fed did not solve the problem of shrinking the balance sheet. All the reduction did was to reduce asset purchases. During the last recession in 2009, the Fed’s balance sheet swelled to $4.5 trillion. They also cut their balance sheets from 4.5 trillion U.S. dollars to 3.7 trillion U.S. dollars until the Fed believes that further reductions will have an adverse effect on the economy. In the past year and a half, the Federal Reserve has been aggressively expanding its balance sheet. At present, its balance sheet has more than doubled to 8.6 trillion U.S. dollars.
It is also believed that the Fed will not start raising interest rates until the end of the reduction in debt purchases, and the process of reducing debt purchases is likely to end in June or July.
Non-agricultural data has been lower than expected several times, and the price of gold has been consolidating for a long time to seek a breakthrough
The second key event is GMT+8 Friday at 20:30, the October non-agricultural employment report to be released by the US Department of Labor. The September employment report was far below economists’ expectations and forecasts. The forecast for last month’s employment report is that non-agricultural jobs will increase by 450,000 Americans. However, the actual number only added 194,000 jobs, clearly showing the impact of the delta mutation virus and labor market shortages.
The current forecast for the November employment report is that 450,000 new jobs will be created in October. However, the actual data in the past two months is far lower than expected. In September, the US Department of Labor reported that 317,000 new jobs were created, which was lower than the 400,000 expected by economists surveyed.
Due to market concerns about the Fed’s tightening policy, the price of gold has remained range-bound for a long time, but it has now shown all the conditions for a sharp rise. The asset adjustment cycle is a war between bulls and bears. This situation of alternating long and short dominating the market can last for a long time before it breaks out.
From the Russell index (Russell index), the price of gold has been consolidating for 10 months. Analysts believe that the longer the integration, the greater the ultimate breakthrough. With the key Federal Open Market Committee (FOMC) meeting and the October employment report coming out this week, it may help gold clarify its direction.
Analysts are optimistic that gold prices will break out in 6 months, setting a record high
Mike Larson, senior analyst at Weiss Ratings, said: “Currently the market is mostly at a high level, real estate is overvalued, and stocks are overvalued. However, the stocks of precious metals and mining companies are still relatively cheap.” What has fallen back is the concern that the Fed will have to take aggressive actions and raise interest rates quickly to curb inflation.
But Larson said: “People will realize in early 2022 that the Fed will not be able to take radical measures. People need to realize that the Fed is facing tremendous political pressure and needs to put employment issues above inflation.”
Larson pointed out: "This tightening cycle will be very different from the previous cycle, and gold and silver will benefit the most. As we enter mid-2022, we will see the next rise in gold and silver, Because people will no longer be so worried about the Fed. Especially if the GDP trend drops a bit, what motivation do they have to raise interest rates significantly?"
Larson's price outlook is quite optimistic. It is expected that gold and silver will reach new highs in the next six months: "The high point of gold and silver that we saw 14 months ago may be surpassed next year. The price of gold is expected to reach US$2200-2400. The US dollar. The price of silver may also follow an upward trend."
On Tuesday (November 2), spot gold fluctuated within a narrow range, trading at around $1790. The first resistance level facing the upside is the 1800 mark. After breaking this key psychological level, the next resistance level appeared at $1836, which corresponds to the high in early September. The current support level starts at the 50-day moving average and is currently fixed at $1782, followed by Friday's low of $1772. Strong support for gold is at $1748 and $1720.
(Spot gold daily chart)
GMT+8 At 09:47 on November 2nd, spot gold was quoted at $1,790.55 per ounce.
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