Gold Price BBI Info
1. Market review: On Thursday, spot gold fluctuated in the range of $30 and finally closed down 0.14% at $1,671.44 per ounce; spot silver erased all intraday gains and finally closed down 0.12% at $19.57 per ounce.
2. On the day after the September FOMC meeting, the Fed accepted a total of $2.359 trillion in fixed-rate reverse repurchase operations from 102 counterparties, a record high. U.S. Treasury Secretary Yellen’s speech showed that she is very hopeful that the Fed can address inflation while maintaining a strong labor market. Yellen believes U.S. inflation will fall next year, but it may not reach its 2 percent inflation target next year.
3. European Central Bank executive member Schnabel said that the European Central Bank must further raise interest rates, but the rate of interest rate hike in October is uncertain. Schnabel said the risk of a recession in the euro zone had risen, while inflation could be more persistent than the ECB initially thought. Traders are betting that the ECB will raise the deposit rate to 3 percent by June next year. ECB members currently expect the European economy to grow by 3.1% in 2022, 0.9% in 2023 and 1.9% in 2024.
4. Weekly dynamics of the super central bank: the central bank has “different eagles and pigeons”
The Bank of England raised interest rates by 50 basis points and announced that it would start selling government bonds from October 3, reducing its holdings of government bonds by 80 billion pounds in the next 12 months;
The Swiss National Bank raised interest rates by 75 basis points, ending the 8-year negative interest rate policy, and prepared to take further foreign exchange measures; – Central Bank of the Philippines and Norges Bank raised interest rates by 50 basis points; – South Africa’s central bank raised interest rates by 75 basis points;
The Bank of Japan once again kept its benchmark interest rate at a record low of -0.1%, and the Bank of Turkey unexpectedly cut interest rates by 100 basis points.
Gold Price Market Viewpoints
1. Gold still under pressure from moving averages
Gold is still suppressed by 1734 and 1831, where the 55-day and 200-day moving averages are located. Gold’s next support is at 1616-1618, the secondary support is at 1560, and finally at 1440-1451. Gold needs to break above the 55-day SMA resistance at $1734 to slow downside pressure, and the next key resistance is the 200-day SMA, currently around 1831.
2. Gold outlook limited amid stronger dollar
Gold may remain under pressure as the Fed continues to stick to its hawkish stance. The current gold market is not too out of control, and the outlook for gold remains limited until the strength of the dollar is reversed. A slowdown and recession risk could be one of the key reasons why gold is holding onto long-term support near 1675. Although it is difficult for gold prices to continue to rise before the end of the year, I do not expect gold prices to fall sharply. The recent sell-off in gold came from speculators who were betting on a re-breakout of gold, and now that the market has dumped them, the rest are investors who stick to their core strategic allocations. There is still a lot of uncertainty in the market, and now is the time to be exposed to gold.
3. Gold bears still have good technical support
Gold bears still have good technical support. Gold’s first resistance is at 1687, while bulls are aiming for a breakout and a close above minor resistance at 1700. The first support is at 1651, and the secondary support is at 1635. The short-term downside target of the bears is to suppress gold to below $1,600.
4. Rising economic risks are building support for gold
Rising economic risks are helping gold build support near $1,660. Although the Federal Reserve has lowered its economic forecasts and maintained a hawkish stance, as gold has been suppressed, it is now increasingly immune to the Fed’s sharp interest rate hikes. Although we don’t think the Fed has too many dovish tendencies, the current market sentiment and overvaluation of the US index have fully priced in this year’s rate hike expectations. On the contrary, gold is undervalued. Although gold still has room to rise, it will have to wait until the fundamentals change to drive the trend of gold. Gold needs worse economic signals to reclaim its status as a safe-haven asset.