The price of gold continues to be revised upwards and is currently hovering above $1730. Both the Federal Reserve and the US Treasury have abandoned short-term concerns about inflation, and the rise in US bond yields has not had much impact, suggesting that their words are working. The United States Zero sales and Federal Open Market Committee meeting (FOMC) will lead this week's risk guidance, and the market is expected to remain calm before the announcement. As of 08:30 Hong Kong time before the press deadline, the price of gold fell 0.02% to 1730.
Fundamental analysis: us Treasury yields rise the Fed abandons inflation concerns
The speech by US Treasury Secretary Yellen appeared to boost gold buyers. Despite showing concern about a short-term rise in interest rates, Ms. Yellen once again rejected concerns about inflation. In the same way that the Fed poured cold water on expectations of monetary easing, both continued to pave the way for short Treasuries.
Jeffrey Gondrack (Jeffrey Gundlach), founder and CEO of Double Line, said: "We don't think the decline in gold will continue and gold is likely to rebound because the sell-off has been very strong. The Fed is not worried about an inflation rate of more than 3% during this period. I think they not only do not care about inflation, but also welcome it to be higher than interest rates. They like negative interest rates because they know very well that negative interest rates help prevent the United States from facing incredible deficits and unfunded debt problems. "
Mr Gondrack finally added that investors could actually reasonably predict that the overall CPI could exceed 4 per cent about four months from now, which would really scare the bond market.
Fundamental analysis: FOMC preview
The FOMC is expected to keep interest rates in its lower zero range, between 0 and 0.25 per cent, with asset purchase rates stable at $12 billion a month, of which $8 billion are US government bonds. At the same time, the statement at the press conference and the speech made by Federal Reserve Chairman Colin Powell are likely to maintain the usual dovish tone. Until the bank completes its latest dual mandate, that is, full employment and inflation are moderately and sustainably above 2.0%, there will be no decision to raise interest rates. The goal that the Fed may reaffirm still has a long way to go, and asset purchases will not be reduced until substantial progress has been made on the dual mandate.
The Fed will issue new economic forecasts and will review them more closely than usual. Officials continue to talk about how they expect inflation to pick up in the short term, and the latest inflation forecasts will formalize that expectation. At the same time, traders will look for more information on whether, when and how the Fed will respond to further increases in US government bond yields, as well as any hints about what conditions the Fed would like to see before reducing its holdings. The Fed may want to avoid pushing yields higher.
Technical analysis:
The price of gold, supported by the 21-month moving average, is still short for a while. From a weekly perspective, bulls are looking for old support as resistance, restoring the average price of bearish impulses to $1765.
