If nothing unexpected happens, gold will continue to survive the disaster!
Gold's counterattack is blocked, August CPI may be difficult to reverse the situation
Stimulated by the intensive hawkishness of Federal Reserve officials, the U.S. dollar index recorded eight consecutive positive weekly trends, while gold also stopped its rebound since August 21.
Last Friday (September 8), the price of gold performed a high and fell trend. It hit a high of 1930 and then fell rapidly. The daily line closed below 1920, recording a long upper shadow, indicating strong selling pressure from above.
In "With the support of the Federal Reserve, the dollar bulls are unyielding!" "In the article, the author pointed out:
The above-mentioned (Federal Reserve) officials' remarks indicate that the Fed is not willing to rule out the option of continuing to raise interest rates, especially if the inflation target has not yet been reached. There is no doubt that the Fed has entered the end of its tightening cycle, and the threshold for raising interest rates again is not low. However, the possibility of lowering interest rates in the short term is almost non-existent unless the economy suddenly declines sharply.
In other words, even if the Fed no longer raises interest rates, it will maintain high interest rates for a long time!
At the same time, recent data including the August ISM non-manufacturing PMI, the number of initial jobless claims for the week to September 2, and the monthly wholesale sales rate in July have performed strongly, indicating that the U.S. economy is still solid and maintaining a hawkish attitude for the Federal Reserve. Provides more confidence.
Overall, the U.S. economic data is mixed and has many bright spots, which makes the Federal Reserve believe that the probability of a U.S. economic recession is low. Some economic data performed less than expected may give gold some support in the short-term trend, but it may be difficult to change the disadvantage of gold prices since May.
Previously, gold had taken advantage of the downward revision of U.S. second-quarter GDP and the overall poor performance of the August non-farm payrolls report. However, the frequent hawkish statements by Federal Reserve officials and the outstanding performance of some economic indicators, coupled with expectations of rising inflation, consolidated the Fed's tightening prospects. Gold prices ultimately failed to break through the pressure near 1950 and fell back below 1920.
The recent continued strength in crude oil prices may mean that the upcoming U.S. overall CPI in August will rebound for the second consecutive month, further reducing the outside world's imagination of the Federal Reserve's short-term interest rate cut. The current market consensus is that the U.S. non-seasonally adjusted annual CPI rate in August will rise to 3.6% from 3.2% in the previous month. However, economists generally believe that core inflation in the United States will continue to decline, and expect the U.S. unseasonally adjusted core CPI annual rate to fall to 4.3% from the previous value of 4.7% in August.
Gold technical analysis: The rebound is blocked and the risk of continued downward movement has not been eliminated
The weekly chart of gold shows that the price continued to rise after testing 1615 (point Y) in the week of September 26 last year, and hit a record high of 2082 (point A) in the week of May 1. Then the market came under pressure and fell below last year's level. The decline continued to expand after the upward trend line since the weekly low of 1617 on October 31. After falling to the lowest level of 1884 (C1) in the week on August 21, the price tried to rebound, but was blocked by the 0.618CC1 retracement level and fell again.
The lower support is at the C1 level. If it falls below this level, more downside space will be opened. Pay attention to 1864. This position is an ideal convergence point for a potential bullish Gartley pattern, which may cause huge interference to the development of the market. If 1864 continues to fail, shorts may point to lower support levels such as 1848 and 1793.
The upper pressure is on the downward trend channel since point A. If it effectively breaks through this obstacle, the bulls are expected to test the 1987 line pressure again. Once the pressure near 1987 is successfully broken, bulls will receive more encouragement, and the market may develop towards the 2050~2080 area.
(Source: Dailyfx-Jack Liu)
