SMM: this week, the dollar rose strongly, hitting a two-month high of 94.75, which led to a frenzied sell-off in gold, with gold futures down 4.9%, the biggest weekly decline since the week of March 13. In addition to the US dollar, gold prices plummeted due to technical breakthroughs, the worsening epidemic situation and the uncertainty of the US general election.
Judging from the trend of gold, spot gold fell below the important support level of $1900 on Monday, falling nearly $70 near the 1880 mark at one point. It briefly returned above the 1990 mark on Tuesday and fell again on Wednesday and Thursday. In particular, it fell to a new low of $1848.60 on Thursday. It fell back after hitting a high on Friday and finally closed around 1860.
Marcus Garvey, a strategist at Macquarie Bank, said that while gold is generally considered a safe haven, the Fed's commitment not to raise interest rates for the next few years has changed the way gold prices fluctuate. "in the current environment, gold will fluctuate as risky assets rather than defensive assets," he said in a telephone interview.
Naeem Aslam, chief market analyst at AvaTrade, said: "the main reason for the decline in gold futures prices this week is the strengthening of the dollar." Aslam said the Fed's "monetary policy confusion led to a rise in the dollar index, which magnified the weakness of gold prices."
Next week, the market will usher in a super-blockbuster week-the first presidential debate in the US election, the US non-farm payrolls report in September, and so on, all of which are likely to have a significant impact on market trends.
For the trend of gold next week, according to the FX168 weekly financial market survey released on Saturday, analysts and traders are basically bearish on the outlook for gold next week. Among traders and analysts surveyed by weekly financial markets, gold consolidation accounted for 25 per cent, while bears accounted for 75 per cent.
Huijin Youdao-Cao Bowen said gold prices are expected to fall next week because gold began two declines this week, the first from 1955 to 1882 and the second from 1920 to 1848, breaking the 1862 low on Aug. 12. it also broke the 23.6% Fibonacci correction since the 1160 rise in August 2018.
As for what to think of gold next week, Huijin Youdao-Cao Bowen believes that gold is likely to continue to run down next week. Gold's two waves of declines this week are very close. Thursday and Friday rebounds were blocked at 38.2% Fibonacci rebound, which fell from 1920 to 1848. In theory, there will be a third wave of decline of about US $72, and it is possible to test the support near 1805-1815 below.
Carsten Fritsch, an analyst at (Commerzbank), a German commercial bank, said the strength of the dollar was a huge resistance to the upside of the gold market, which hindered the rise in gold prices despite increased risk aversion. But the strong performance of the dollar is hard to sustain.
The low interest rate is the reason for the sharp rise in gold prices. But since the beginning of August, real interest rates in the United States have remained largely unchanged, with no further decline, and only a sharp rise in inflation is likely to cause interest rates to fall sharply.
Ole Hansen, head of commodities strategy at (Saxo Bank) at Saxo Bank, said inflation is unlikely to be too much of a concern for investors as the global economy recovers slowly.
After this week's plunge, gold fell below the 50-day moving average, which is technically a sell-off signal. The key to the next gold price is the 100-day moving average, but once it falls below this support, the gold market is likely to fall further.