After reaching a record high of $2,509.65 last Friday, the gold price was suppressed on Monday and the profit-taking adjustment once pushed the gold price below $2,500, but it returned to near the historical high of $2,501.74 in the closing stage.
After hitting a new high, the price of gold on Monday suffered slight adjustments due to profit-taking, but this retracement did not change the overall upward trend of gold. It only highlighted the phenomenon of market profit-taking at high positions, just like several times before. Moreover, the space and magnitude of this retracement are obviously smaller than before, because there are many bullish technical indicators and the market is also approaching the interest rate cut cycle. Therefore, the downward momentum of the gold price is quite limited. In addition, although the retail sales data for July and the number of initial jobless claims in the United States were lower than expected, enhancing confidence in the economy, a speech by important Federal Reserve official Quarles has reignited concerns about a recession. He mentioned that warning signals were sent by the labor market and economic indicators, leading to a flow of safe-haven funds into gold. Moreover, the future interest rate cut expectation of the Federal Reserve is also an important factor driving the gold price. It is expected that the probability of the Federal Reserve cutting interest rates by 25 basis points in September is 75.5%. Although the expectation of the interest rate cut may fluctuate, the market generally expects the interest rate cut to be nailed down. From the performance of overnight gold, it can be seen that the gold price quickly returned to near the historical high only with a slight decline, reflecting investors' firm belief in the Federal Reserve's interest rate cut. At present, the market focus will turn to the record of the previous policy meeting announced by the Federal Reserve on Wednesday and the speech by Chairman Powell at the Jackson Hole Economic Symposium on Friday. Even if Powell expresses the intention that the interest rate cut will not be aggressive, if he reveals a clear message of interest rate cut in September, it is believed that it will still be a bullish support factor for gold.
Source: E-huitong
On the technical level, the international gold price remained near the historical high after a volatile consolidation on Monday, with a small negative line and a relatively long lower shadow line recorded on the daily chart. Although the rebound momentum of the gold price weakened and the trend retreated for a while, the three resistance levels around $2,480, which were previously broken, have now turned into strong support, so the market produced bid when it approached this support yesterday. Although it still faces the demand for retracement, the overall daily moving averages remain orderly upward and divergent, and the MACD technical indicator shows that the bullish arrangement is strengthening, indicating a good bullish pattern. In the recent trend of gold prices, attention should be paid to support near $2,497 and $2,488 and resistance near $2,510 and $2,518.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.