SMM News: spot gold closed down on Tuesday, ending the trend of six consecutive days of closing, the lowest in the U. S. market reached 1411.80 U.S. dollars / ounce, gold prices fell back after hitting a six-year high, the dollar stopped falling and rising. Speaking in the early hours of Wednesday morning Beijing time on the economic outlook and monetary policy, Fed Chairman Powell stressed the Fed's independence and will not succumb to pressure from the White House to cut interest rates, boosting the dollar and bearish gold.
Speaking at the (Council on Foreign Relations) of the Council on Foreign Relations in New York, Federal Reserve Chairman Powell said investors are watching closely for clues about the direction of monetary policy.
"the Fed is not affected by short-term political pressure, which is often referred to as our 'independence,'" Powell said in a prepared speech. "Congress chose to isolate the Fed in this way because it saw the damage that often occurs when policy shifts to short-term political interests. Central banks in the world's major democratic countries have similar independence. "
President Trump has been pressing Powell and his colleagues to relax their policies. He said the rate cut would further boost the economy and the stock market. But economists say the situation is even worse. More and more people on Wall Street are seeing signs of a slowdown in the bond market that could turn into recession in the coming year or so.
On the economy, Powell reiterated that inflation continues to fall below the Fed's target of 2 percent. He also said the risks to the Fed's outlook had increased and that the view that interest rates should remain stable in May was called into question.
In response to monetary policy, Powell said the Fed is considering whether monetary policy easing is needed to deal with uncertainty. Trade uncertainty and concerns about global growth could prompt interest rate cuts. Central banks are more inclined to take pre-emptive action.
Just before Powell's speech, Brad, chairman of the St. Louis Fed, said it might be too much to cut interest rates by 50 basis points in July. However, he pointed out that now is a good time to make so-called insurance quotations. Brad's comments set off a rebound in the dollar, while Powell's comments added to the bulls.
Affected by Powell and Brad's latest remarks, the dollar index rose in the short term; spot gold fell sharply in the short term.
The world's largest gold ETF fund data showed that the gold ETF position of the US SPDR Gold Trust fund increased by 34.93 tons on Friday, the biggest increase since February 14, 2009. So far this month, the fund has increased its holdings by nearly 60 tons to 801.96 tons, the largest since February 13, 2019.
At present, from a technical point of view, gold prices have been overbought, technical adjustments will occur at any time. However, gold bulls have a comprehensive technical advantage, the temporary pullback does not affect its rising trend, gold prices are still in a seven-week upward trend. The next goal for bulls is to hold above $1420 and challenge the 1450 mark; the next goal for bears is to push gold prices down to a key support level of $1361.50 an ounce. The first resistance was $1420, followed by $1430; the first support was $1415, followed by $1410.
Tuesday trend statement
The international spot gold market rose steadily at US $1419.25 / oz in early trading, recording an intraday high of US $1438.63 / oz and rebounding after a sharp fall in gold prices. European gold prices turned into a small decline after the bulls rose again, gold prices rebounded to intraday highs. Gold prices in the United States fell again, diving in intraday trading, recording an intraday low of $1411.80 / oz before rebounding before turning into consolidation, closing at $1419.35 / oz.
International spot gold opened at $1419.25 an ounce in early trading on Tuesday, falling as low as $1411.80 an ounce, rising as high as $1438.63 to close at $1419.35, down $7.55, or 0.53 per cent.
Fundamentals are positive:
1. The initial value of the US Markit manufacturing PMI for June, released on Friday, was 50.1, below the previous value of 50.5 and the expected 50.4, breaking the lowest level since September 2009. The initial value of Markit service PMI in the United States in June was 50.7, below the previous value of 50.9 and the expected 51, refreshing the lowest level since February 2016.
2. On Wednesday, the FOMC meeting of the Federal Reserve announced that interest rates would remain unchanged and hinted at the possibility of interest rate cuts in the future.
3. On Tuesday (June 18), the monthly rate of new housing starts in the United States in May was-0.9%, below the previous value of 5.7% and expected 0.4%, creating a negative factor for the dollar and boosting gold.
4. The New York Fed manufacturing index for June, released on Monday, fell 8.6, below the previous value of 17.8 and expectations of 11; it fell to its lowest level since 2016. The New York Fed manufacturing index unexpectedly fell sharply in June, adding to concerns about the US economy, although the data was not usually a major factor in dollar volatility, according to the analysis.
Fundamentals are negative:
1. The number of initial jobless claims in the United States last week, announced on Thursday, was 216000, below the previous value of 222000 and the expected 220000; the impact on the dollar was positive but the impact was not significant.
2. The monthly rate of retail sales in the United States for May, announced on Friday (14 June), was 0.5%, with the previous value revised from-0.2% to 0.3%, with a forecast of 0.6%, and the monthly rate of core retail sales in the United States for May was 0.5%. The previous value was revised up from 0.1% to 0.5%, with a forecast of 0.3%. Foreign media commented that US retail sales rose in May from a month earlier, indicating that consumer spending was starting to pick up, a figure that could allay fears of a sharp slowdown in the US economy in the second quarter.
3. Data released by the Federal Reserve on Friday (June 14) showed that manufacturing output rose 0.2%, in line with market expectations, falling 0.5% in April. The monthly rate of industrial output in the United States in May was 0.4%, expected to increase by 0.2%. The previous value was down 0.5%.
4. Data released on Friday (14 June) in the United States showed that the initial value of the University of Michigan consumer confidence index for June was 97.9, which was basically in line with expectations, with a previous value of 100.
More than 2/3 of Wall Street professionals and retail investors are still bullish on gold this week, according to a weekly gold survey released by 1.Kitco on Friday. Of the 18 people surveyed of professionals, 12 or 67 per cent thought gold would rise this week; three or 17 per cent thought the price would fall; and three or 17 per cent remained neutral. Market participants include gold traders, investment banks, futures traders and technical analysts. Of the 936 ordinary investors who took part in the online survey last week, 616, or 66 per cent, thought gold was still bullish this week, while 196, or 21 per cent, were bearish; 124, or 13 per cent, remained neutral.
Jim Wyckoff, an analyst at 2.Kitco Gold, said in a report on Tuesday that with the gold market at a six-year high, long-term charts should be carefully reviewed to get important ideas about where prices are going and where they are likely to go. Wyckoff said the monthly continuation chart of Comex gold futures showed that prices were rising, just above the technical resistance level of recent highs. The upward "breakthrough" from these resistance areas allows bulls to achieve the next uplink price target on long-term charts. This will be the chart resistance level of $1530.00 / oz area. The strength of the bullish upward breakthrough suggests it will reach $1530.00 this year and is likely to rise to that level by the end of the summer.
3. Edward Meir, a commodity consultant at Fushitong International INTL FCStone, said that the trend of gold is still continuing, but technical indicators are indicating that gold may be overbought in the short term. Meir thinks gold may benefit from the parallel strength of Bitcoin. He played down the impact of US sanctions on Iranian leaders because "sanctions against foreign leaders who do not have traceable assets abroad are ineffective." At the same time, turning to technical issues, Meir said, "the relative strength index of gold is currently 84, so it is quite overbought, while the strength index of the dollar is 27 and oversold." As a result, the two are likely to reverse, and perhaps we can see that this happens after the G20, depending on what happens there. "
4. Commerzbank said that the price of gold hit a new six-year high as the dollar exchange rate remained weak and investors continued to invest in the gold-backed exchange traded fund ETF, gold. "this rise was accompanied by an increase in ETF inflows, with a 4.3t increase in positions this time," the bank said. " The weakness of the dollar has also pushed up prices. The latest U. S. sanctions against Iran have also played a role, adding to the uncertainty about the conflict between the United States and Iran. In addition, US President Donald Trump has repeatedly attacked the Federal Reserve for playing a role.
5. Dow Securities said the price of gold exceeded $1400 an ounce for the first time since 2013. "the biggest challenge for gold will be to maintain a new interest in bulls because the market has already priced gold aggressively," Mr Dominique said. "nevertheless, we raised our target price to $1486 an ounce, although we believe the upward path may be unstable, especially if US data continue to be strong in contrast to the Fed's positive expectations."
Han Tan, a market analyst at 6.FXTM, said gold should be able to maintain its luster for some time. "it has soared to its highest level since 2013 and investors will certainly wonder how much room there is for gold to go up," the analyst said. "as concerns about global growth prospects intensify, the allure of gold will only increase, while the prospects for global economic growth have been hit hard by trade tensions, which have been going on for nearly a year.
Todd Horwitz, chief market strategist at 7.BubbaTrading.com, writes that from a technical point of view, they seem to be chasing heights, whether they are short-covering or worried about missing opportunities; buyers are always not buying enough. Horwitz points out that, as we have seen in all markets, this is usually a sign that the trend is coming to an end. We expect gold prices to suspend gains and have some profit-taking. We expect the price to fall back to $1380 to $1390. Spot gold is currently trading slightly above $1420 an ounce, meaning the price of gold will tumble by $30 to $40. 'our view of gold and metals has not changed; gold is likely to hit $1500, 'Mr. Horwitz said. However, the market will not rise or fall in a straight line, this should be the time for gold to suspend, pull back and reload. Not today, though it looks as if the sell-off is quietly approaching. Never chase the ups and downs of the market. We will seek to increase positions in the event of a pullback.