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The international gold price outlook is still down at $1,643 by Huitong Finance

The international gold price outlook is still down at $1,643 by Huitong Finance
The international gold price outlook is still down at $1,643 by Huitong Finance

The international gold price outlook is still down at $1,643

On Friday (September 23), the international gold price was under pressure, not far from the new low of $1653.73 per ounce set this week since early April 2020; the US dollar index continued to hit a new high since early June 2002 to 111.874, and the Federal Reserve increased aggressively. Interest rate expectations weighed on the attractiveness of non-yielding asset gold. The market outlook for gold is still down at $1,643.

At 15:20 Beijing time, spot gold fell 0.14% to US$1,668.66 per ounce; the main COMEX gold futures contract fell 0.27% to US$1,676.6 per ounce; the US dollar index rose 0.39% to 111.709.

Ajay Kedia, head of Kedia Commodities in Mumbai, said: “I expect prices to remain volatile in the short term as the market has already priced in a (75bps) rate hike and that’s why we haven’t seen a big drop in prices. We’re looking at $1,650 as Support, see $1,720 as resistance… Further rate hike expectations limit gold upside.”

Following the Federal Reserve, a number of central banks around the world raised interest rates on Thursday (September 22), sparking fears of a global recession. European Central Bank board member Schnabel defended the ECB’s plans to raise interest rates further, saying inflation in the euro zone will continue to rise.

Nicky Shiels, head of metals strategy at MKS PAMP, said in her latest research note that rising economic risks are helping gold find a solid bottom near $1,660, even as the Federal Reserve maintains its aggressive monetary policy stance while lowering its growth outlook.

No one knows if this process will lead to a recession, or how severe this recession will be. It depends on how quickly price pressures come down and whether we continue to have a steady supply of labor. Failure to restore price stability will mean more pain.

“Powell is neither hawkish nor dovish, but pessimistic,” Shiels said in the report; “there will be further pain, with a softer landing less and less likely. Not to mention that the pace of Fed rate hikes is a clear indication of tackling inflation. obvious error.”

The liquidation of speculative bearish positions could also now be positive for gold, Shiels added, as the precious metal has been out of favor, suffering a sustained strong sell-off for much of the summer. Gold has been hit so hard that it is increasingly immune to excessive Fed rate hikes, she noted.

On the daily line, the price of gold has started three downward waves from $1,735, falling below the 61.8% target of $1,661. The market outlook is expected to drop 76.4% of the target at $1,643 and 85.4% of the target at $1,633. Wave 3 is the sub-wave of the downward wave III since $1808, and the 38.2% target of wave III is $1658. Wave III is a sub-wave of the descending (C) wave that started at $2,070.

The article is in Chinese

Tags: international gold price outlook Huitong Finance

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