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Market News Gold market analysis: High inflation raises interest rate hikes, expecting gold to accelerate downward

Gold market analysis: High inflation raises interest rate hikes, expecting gold to accelerate downward

If the price of gold cannot return to above the horizontal line of 1830 at the bottom of the previous shock range, be careful that gold continues to test downwards. If it falls below the 1800 integer mark, the lower support will fall at the $1786 level.

2022-06-14
12086
Gold fell sharply on Monday as the U.S. dollar rebounded on bets for a sharp U.S. Federal Reserve rate hike, denting the appeal of gold and other precious metals. Spot gold fell 2.8 percent to $1,819.13 an ounce, having touched an intraday low of $1,817.44.



U.S. consumer prices accelerated to 8.6% in May from a year earlier, hitting a more than 40-year high. Core CPI rose 6% year-on-year in May, slightly down from 6.2% in April, but nowhere near the point where Fed Chairman Jerome Powell could slow rate hikes. The yield on two-year U.S. Treasuries, seen as a proxy for the Fed's policy rate, topped 3 percent for the first time since 2008, suggesting the central bank may maintain an aggressive rate hike stance until September. Any hope that the Fed will slow the pace of interest rate hikes after its June and July meetings now seems remote. Fed policymakers will release their forecast for the ultimate goal of this round of rate hikes at the end of this week's meeting. The Fed will also forecast how high the unemployment rate, currently at 3.6%, may rise before the economy slows enough to reduce inflation. Fed policymakers are all but committed to raising rates by 50 basis points each this week and at their July meeting, following a 50 basis point rate hike in May and the start of a balance sheet reduction this month. And some institutions even predict that the Fed will not rule out a 75 basis point interest rate hike this week. Barclays analysts said in a note: "U.S. CPI unexpectedly surged and continues to show broad and persistent price pressure. We think the Fed may want to surprise the market by raising rates by 75 basis points in June. To rebuild its ability to fight inflation." In the short term, non-yielding asset gold is feeling the pressure from soaring interest rates.

In the morning on Monday, the gold price reached the highest level of 1879, and the short-term remained moderate and fluctuated. During the European and American trading hours, the gold price started an accelerated downward trading market, all the way to the level of 1817. On Tuesday morning, the gold price accelerated to the lowest level and dropped to 1809. . In terms of technical graphics, the daily line recorded a relatively strong solid column, and the short-term gold price once again formed a downward trend against the 200-day moving average of the daily line. Bearish guidance reference. The hourly line shows that the sharp drop in the short-term gold price has brought the hourly line into a more orderly downward divergence and bearish arrangement, but the technical indicators on the hourly chart all need to be oversold and adjusted. If it falls below the 1800 integer mark, the lower support will fall at the $1786 level.

Personal views only, do not represent the views of the organization

Bank of China Guangdong Branch Wang Gang Source: Bank of China official website
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