Gold trading reminder: Gold prices have rebounded from a one-week low and the long-short game could be intensifying
During the Asian session on Tuesday (November 22nd), spot gold fluctuated and rallied slightly. It is currently trading around US$1743.10 an ounce, recovering some of the overnight dip. The US dollar gave up some overnight gains, providing gold with rebounding momentum It fell on the first trading day and the short-term downside momentum has weakened and the gold price has now completed confirming the support around at 1735.02 and some bulls have re-entered the market.
The likelihood of the Fed raising interest rates by 75 basis points in December has rebounded slightly
There are still many Fed officials who will be speaking on this trading day and investors need to focus on that. What needs to be remembered is that the market’s attention has started to focus on the minutes of the Federal Reserve meeting which will be released this Wednesday, even though Thanksgiving Day will be introduced on Thursday. Relatively speaking, current market expectations for the Federal Reserve’s 75 basis point rate hike in December have risen, which is slightly bearish and bearish for gold prices. Investors need to pay attention to changes in market expectations. market.
According to CME “Fed Watch”, the probability that the Fed will raise interest rates by 50 basis points in December in the 4.25%-4.50% range is 71.1% (the maximum was 94% last week and 75.2% the day before), and the probability of raising interest rates by 75 basis points is 28.9% (it dropped to 0 last week and was 24.8% the day before) .
The dollar rebounds to a more than one-week high
Gold prices fell 0.67% on Monday, falling for the fourth consecutive session, hitting a six-session low of $1,732.40 an ounce during the session, as dollar and US bond yields continued to rebound, putting pressure on gold prices.
It rose 0.77% on Monday, at one point hitting a six-day high of 108.00 and closing at 107.82. he collected. However, Cleveland Fed Chairman Mester expressed support for slowing the pace of interest rate hikes starting in December and San Francisco Fed Chairman Daly said the maximum interest rate is about 5%. , which is lower than the earlier statement of 5.25%, which leaves dollar bulls still having qualms.
US Treasury yields of most maturities rose on Monday, aided by expectations that the Federal Reserve will raise interest rates further.10-year US Treasury yieldThe price of gold rose 0.24% on Monday to close at 3.827%, but the momentum of the rebound has weakened and gold bears need to be vigilant. If US bond yields resume their decline, it could offer gold prices an opportunity to pick up their gains.
John Luke Tyner, fixed income analyst and trader at Aptus Capital Advisors, said: “You continue to see that since the Consumer Price Index (CPI) was released two weeks ago, terminal interest rate expectations highs have pushed the front end of the yield curve to rebound, which continues to put pressure on long-term bond yields.”
The ECB increases the chances of a rate hike below 75 basis points in December
While the expectation of further interest rate hikes from the Federal Reserve and most central banks around the world is still suppressing gold prices over the medium to long term, this expectation has been substantially digested by the market to date. moment.What needs to be remembered is that many European Central Bank officials have indicated that the European Central Bank’s rate hike in December could be less than 75 basis points, which should provide a chance for gold prices to rebound. in the short term.
“Overall, the overall macro environment remains one of rising interest rates, which is a headwind for precious metals, with central banks continuing to look to raise rates,” said Chris Gaffney, chairman of markets. global at TIAA Bank.
European Central Bank executive member Lane (and chief economist) said on Monday that the European Central Bank will hike interest rates again in December, but the ability to raise interest rates by 75 basis points has weakened and the decision to December will take into account previous measures and transmission process factors such as delay.
Portuguese central bank governor and European Central Bank board member Centeno (Mario Centeno) also said on Monday that the ECB’s next interest rate hike could be less than the record 75 basis points set at the previous two meetings.
The investment bank expects global growth to slow further in 2023
On the other hand, expectations of a global economic downturn should still provide opportunities for gold prices to pick up their gains.
The world’s largest investment banks expect global growth to slow further in 2023 after war and rising inflation in 2022 triggered one of the fastest monetary policy-tightening cycles in years.
BNP Paribas expects global economic growth to fall to a low of 2.3% in 2023, with most major economies falling further below pre-epidemic growth trends in 2023-24.
Overall, the short-term gold price tends to fluctuate and the long-short back-and-forth relationship may intensify, even as factors such as the prospect of interest rate hikes by most central banks around the world world and the US rebound. dollar are putting pressure on gold prices in the short term, the expectation of a slowdown in the pace of interest rate hikes and the prospect of a global economic recession is expected to continue to provide support to the price of gold. , gold price completed technical support confirmation near Sept 12th high of 1735.02 Investors should be wary of the possibility of gold price resuming its uptrend.
The current resistance of the 5-day moving average is around 1752.78. If the price of gold can regain this position, it will add a short-term bullish signal. Below, focus on the support around 1721.96, the 38.2% retracement of the 1616-1786 rally. market prospects.
At 10:00 am Beijing time, spot gold was at $1743.30 an ounce.
