Gold fails to stop the bleeding

Gold seems to have continued moving in a downwards fashion, as we continue to maintain the view that the negative correlation of the USD with gold’s price seems to be maintained and may be the main factor behind the movement of gold’s price currently. In addition, we note the US 10 Year TIPS reaching levels last seen in 2009. We note as the next big test for gold’s price the key psychological level of $1900, as it is currently aiming for that level at the time of this report. In this report, we aim to shed light on the catalysts driving gold’s price, assess its future outlook and conclude with a 技術分析.

US 10 Year Real Yields reaches levels last seen in 2009.

The US 10 Year Treasury Inflation-Protected Securities or TIPS for short, at the time of this report appears to have reached levels last seen in 2009. The rise of the US10YEAR TIPS could be attributed to a growing anticipation by market analysts, that the US may see a prolonged period of high interest rates, due persistent inflationary pressures. In particular, the Core CPI rate for July despite coming in lower-than-expected last Thursday, it was still higher than the previous month, indicative of persistent inflationary pressures in the US economy.

In addition, the Core PPI figures exceeded expectations, further fuelling the theory that prolonged 高 interest rate levels may be needed. The persistent inflationary pressures in the US, could potentially allow the Fed to maintain current interest levels or continue hiking should inflation continue to persist, which in turn may have facilitated the decline in the price of gold, as more market participants may opt for the US Treasury bonds which are interest bearing, whereas gold is not.

Therefore, as the US Treasury bond yields rise, it may not be uncommon to see the price of the precious declining, highlighting their inverse relationship. Lastly, as demand for US Treasury bonds rise, demand for the dollar increases as-well given that they are purchased 使用 US dollars, therefore as demand for the greenback increases, the precious which is denominated in dollars becomes more expensive for overseas buyers. Potentially leading to reduced demand for gold, thus weighing on the price of the precious, as the greenback strengthens.

China’s economic woes and their gold holdings.

The current economic situation in China poses an interesting question. As we had mentioned in last week’s gold report, China’s gold reserves grew by approximately 23 tons during July, marking 9consecutive months of consecutive buying. Since last week’s report, financial releases stemming from China seem to indicate that the country’s economy has taken a turn for the worse, with the PBOC announcing a surprise interest rate cut on its one-year loans to 2.5%,  earlier on today and the country’s industrial production and retail sales rates coming in lower than what was expected by market analysts, seems to have highlighted growing concerns about the ‘health’ of China’s economy.

Therefore, continuing from last weeks assumption that China’s aggressive diversification of reserves may have provided some support for the bullion, the current data could potentially hinder the continuation of China’s diversification attempts, which may have a negative impact on the precious’s price, should demand be reduced thus potentially resulting in the price of gold being pushed to lower ground.

技术分析

黄金/美元4小时走势图

• 支撑: 1900 (S1), 1865 (S2), 1830 (S3)
• Resistance: 1920 (R1), 1943 (R2), 1971 (R3)

The precious metal appears to be in a downwards fashion with the precious appear to be aiming for the $1900 (S1) key psychological support level, after having broken the 1920 (R1) support turned resistance level. We tend to maintain a bearish outlook for the commodity and supporting our case is the RSI indicator below our 4-Hour chart which is currently near the 30 figure , implying a bearish market sentiment, in addition to the downwards moving trendline incepted on the 31  of July and the downwards moving channel incepted on the 4    of August. For our bearish outlook to continue, we would like to see a clear break below the 1900 (S1) key psychological support level, with the next possible target for the bears being the 1865 (S2) support base.

On the other hand, for a bullish outlook, we would like to see a clear break above the 1920 (R1) resistance level, with the next possible target for the bulls being the 1943 (R2) resistance ceiling, which would coincide with a clear break above the downwards moving trendline 和 channel that were previously mentioned.

免责声明:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.