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29/04/2021

In addition, the Fed refuted the claims that it will soon reduce the scale of bond purchases. Fed Chairman Powell also explained the Fed's shortcomings in achieving the dual goals of inflation and employment. According to data from the Bureau of Economic Analysis (BEA), the annual rate of core personal consumption expenditure (the Fed’s preferred inflation data) in February was 1.6%, higher than the 1.4% in January.



Because of the Fed’s moderate remarks, investors turned to U.S. Treasury bonds, especially short-term Treasury bonds, and U.S. Treasury yields fell. The 5-year U.S. Treasury yield fell after rising for three consecutive trading days, and the decline expanded to nearly 10% within the month. The 10-year U.S. Treasury yield fell by more than 0.5%.



Many investors and analysts worry that reducing the size of their balance sheets prematurely may cause yields to rise too fast and too much in the context of an economic recovery where the recovery is still fragile. In addition, the supply of government bonds may increase substantially, which will fund the Biden administration's infrastructure spending and other initiatives. Although it is not clear how much of the new spending will be funded, it is almost certain that the US Treasury will have to increase bond issuance.



Therefore, the increase in the supply of Treasury bonds, coupled with the decline in the Fed’s balance sheet, may cause bond prices to fall, thereby pushing up yields. This may be a problem for the Fed, because a sharp increase in yields may be detrimental to the central bank’s goal of stimulating the economy by possibly curbing lending and other credit activities in the financial market. Nevertheless, the Fed may still be cautious about shrinking its balance sheet, at least for now. Simply put, the Fed may have no reason to go against its own interests, which may be good news for the price of gold.

29/04/2021

The US March PEC index will be announced later this week, and the market expects consensus that core personal consumption expenditure will increase by 1.8% year-on-year. A sharp increase in the amount of money printed by the United States may boost inflation expectations, perhaps to the extent that it conflicts with the Fed's suggestion that the short-term rise in inflation is only a temporary phenomenon. If bond yields rise too fast, this will be another challenge to Fed policy.

29/04/2021

The US March PEC index will be announced later this week, and the market expects consensus that core personal consumption expenditure will increase by 1.8% year-on-year. A sharp increase in the amount of money printed by the United States may boost inflation expectations, perhaps to the extent that it conflicts with the Fed's suggestion that the short-term rise in inflation is only a temporary phenomenon. If bond yields rise too fast, this will be another challenge to Fed policy.
On the daily chart, the price of gold is testing the 100-day simple moving average, which is currently only slightly below 1800. If the gold price breaks the moving average and the 1800 mark in the market outlook, the upward challenge is expected to start from the upper track of the downward channel since the high point in August last year (the green upper track in the figure). On the contrary, if the price of gold meets resistance and declines, it may further fall to the 23.6% Fibonacci retracement level and the 38.2% Fibonacci nonsense. The lower target is to look at the 50-day simple moving average.

29/04/2021

Gold stabilized at the key support of US$1760 yesterday, and then rebounded sharply to reach the level of US$1790. It is currently maintained at around US$1780 for consolidation. It is worth noting that the support from the trend of gold at 1760 US dollars suggests that a new round of uptrend may have begun. If gold can effectively stabilize at the level of 1770-1775 US dollars in the short term, it may further challenge the US$1800 or even the US$1840 level. The key to the continuation of the mid-term uptrend is still at the $1,760 level.

28/04/2021

In terms of precious metals, Goldman Sachs expects that the price of gold will return to $2,000 per ounce in the next six months. The latest international gold price was reported at US$1769 during the European session on Wednesday.

Goldman Sachs also stated that it is too early for Bitcoin to compete with gold for safe-haven demand and that the two can coexist. "Although Bitcoin is benefiting from greater liquidity, due to its high energy consumption, it suffers from a lack of practical use and low environmental, social, and governance (ESG) scores," Goldman Sachs said.

The bank added that such a large amount of energy consumption makes it easy for this cryptocurrency to lose its "store of value" demand and easily be replaced by another better-designed competitor.

Goldman Sachs also raised its copper price expectations, setting a target price of US$11,000 per ton for the next 12 months, citing insufficient investment in supply. The latest LME copper futures quoted at $9813 on Wednesday.

The bank said, "The only way to resolve this record-breaking and rapidly approaching supply crisis is perhaps to push prices further to record highs."

The bank added that although China will continue to play an important role in commodity demand, it is not expected to become the only major source of growth in the next decade.

Goldman Sachs firmly sings about many commodities: crude oil and gold will rise by double digits in the next six months

27/04/2021

At midday in the Asian market on Tuesday, the price of gold futures hovered around US$1780, continuing the consolidation state for nearly a week. Investors waited for the Fed’s monetary policy meeting to indicate the direction of the market outlook.

The Federal Reserve will hold a two-day monetary policy meeting later today and will announce its monetary policy statement on Wednesday, local time. Analysts predict that the Fed will stand still and will not substantially adjust its policy, while the market focus will be on Fed Chairman Powell's outlook on the economy and inflation.

US claims for unemployment benefits have fallen to the low point of the new outbreak, and the US job market has continue...
25/04/2021

US claims for unemployment benefits have fallen to the low point of the new outbreak, and the US job market has continued to improve with the relaxation of COVID-19 related restrictions.Weekly claims came in at 547,000, better than the baseline forecast of 617,000.The better-than-expected fundamental outlook revives reflation hopes and could dent demand for non-yielding gold as an investment asset.
Meanwhile, U.S. President Joe Biden's plan to raise capital gains taxes on wealthier Americans caused a sharp overnight pullback in risky assets.Deteriorating risk appetite is likely to increase gold's appeal as a safe haven asset, mitigating downside risks.
Technically, gold is likely to have formed a "double bottom" after hitting $1,677 twice.A double bottom pattern usually occurs at the end of a downtrend and can be seen as a strong bullish signal.Gold is facing some selling pressure around the immediate resistance level at $1,785 -- the Fibonacci 38.2 percent retracement.A successful break above this level could open the door for further upside potential, keeping an eye on the target level implied by the 1,810--" double bottom "pattern.US claims for unemployment benefits have fallen to the low point of the new outbreak, and the US job market has continued to improve with the relaxation of COVID-19 related restrictions.Weekly claims came in at 547,000, better than the baseline forecast of 617,000.The better-than-expected fundamental outlook revives reflation hopes and could dent demand for non-yielding gold as an investment asset.
Meanwhile, U.S. President Joe Biden's plan to raise capital gains taxes on wealthier Americans caused a sharp overnight pullback in risky assets.Deteriorating risk appetite is likely to increase gold's appeal as a safe haven asset, mitigating downside risks.
Technically, gold is likely to have formed a "double bottom" after hitting $1,677 twice.A double bottom pattern usually occurs at the end of a downtrend and can be seen as a strong bullish signal.Gold is facing some selling pressure around the immediate resistance level at $1,785 -- the Fibonacci 38.2 percent retracement.A successful break above this level could open the door for further upside potential, keeping an eye on the target level implied by the 1,810--" double bottom "patternUS claims for unemployment benefits have fallen to the low point of the new outbreak, and the US job market has continued to improve with the relaxation of COVID-19 related restrictions.Weekly claims came in at 547,000, better than the baseline forecast of 617,000.The better-than-expected fundamental outlook revives reflation hopes and could dent demand for non-yielding gold as an investment asset.
Meanwhile, U.S. President Joe Biden's plan to raise capital gains taxes on wealthier Americans caused a sharp overnight pullback in risky assets.Deteriorating risk appetite is likely to increase gold's appeal as a safe haven asset, mitigating downside risks.
Technically, gold is likely to have formed a "double bottom" after hitting $1,677 twice.A double bottom pattern usually occurs at the end of a downtrend and can be seen as a strong bullish signal.Gold is facing some selling pressure around the immediate resistance level at $1,785 -- the Fibonacci 38.2 percent retracement.A successful break above this level could open the door for further upside potential, keeping an eye on the target level implied by the 1,810--" double bottom "pattern.

24/04/2021

A preliminary reading of the U.S. manufacturing PMI from market research firm IHS Markit came in at 60.6 in April, the highest reading since records began in May 2007, versus expectations of 60.5 from 59.1.In the US, the preliminary Markit services PMI came in at 63.1 in April, the highest level since records began in October 2009, vs. expectations of 61.9 vs. 60.4 last.The preliminary Markit composite PMI for the United States came in at 62.2 in April from 59.7.

'The U.S. economy got off to a strong start in the second quarter,' said Chris Williamson, chief business economist at IHS Markit, commenting on the data. 'A more optimistic outlook and stimulus measures helped boost demand as restrictions eased and vaccines were rolled out.The services sector is growing at its fastest pace in nearly 12 years of survey history, and manufacturers are reporting one of the strongest expanses of the past seven years.

Sales of new homes rose to an annual rate of 1.021 million units in March, the highest since September 2006 and well above expectations of 886,000 units and 775,000 units, Commerce Department data showed.New home sales in March rose 20.7 percent on an annualized basis versus expectations for 12 percent from -16.2 percent revised up from -18.2 percent.

The dollar index.DXY quickly recovered from session lows after the data, rising more than 20 basis points to trade above 91.10.The yield on the 10-year Treasury note was notably higher, up nearly 2.5 percent on the day and now trading around 1.575 percent.Gold extended its losses to as low as 1,770, off the day's high of more than $25.

In my view, the US economic recovery appears to be more robust than expected, which keeps expectations of Fed tightening rising, which is negative for gold.

And while the dollar index has been losing ground this month, it probably can't be blamed on the fundamentals of the greenback.In my opinion, the strong recent U.S. economic data, coupled with the need for a technical correction after the significant rise in the dollar index over the previous three months, has given rise to a "buy the expectation, sell the fact" scenario for the dollar.The decline of the dollar index provides strong support for gold.

In fact, recent US economic data have been perhaps the best of any major advanced economy.

Once the dollar index and Treasury yields stabilize, gold could face another sell-off.However, if the dollar index continues to weaken, gold may be looking to break the 1800 level.
Gold technical analysis: lost the recent upward trend line may intensify the decline

Gold's 4-hour chart shows that on March 18, it hit 1756 (X) and then fell to 1678 (March 31 low, A). It then continued to rally and hit 1798 (B) on April 22, held back by 1.618XA extension.

Prices are now recovering slightly from the uptrend line they have seen since point A (the current cut is at 1770). A breach of this support would disrupt the recent uptrend and could add to the decline.In addition, pay attention to 1760~1765 area support, such as the fall below this support, it may be announced that the recent rally has come to an end, the short-term fear of no return to the above 1800.

However, the bulls could get more encouragement from a break above 1800-1804 (1.618xa), or a move towards 1850.

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