In Asian markets on July 7, Beijing time, gold fluctuated above $1,740 an ounce in intraday trading, and the short-term gold price rose slightly. The dollar index rose to a fresh 20-year high of 107.28 after data showed that growth in the U.S. services sector slowed to a more than two-year low in June. Persistent fears of an economic slowdown prompted traders to flock to safe-haven assets, boosting the dollar. The U.S. dollar index is up 12 percent so far this year, on track for its best year since 2014.
Recession risks rise as Bank of Canada tightens policy
The risk of a recession in Canada has climbed to 40 per cent, with the Bank of Canada’s aggressive rate hikes the “biggest near-term threat” to the economy. The Bank of Canada’s policy rate is expected to rise to 3% in October from the current 1.5%, as it looks to reduce inflationary pressures. Canada’s overvalued housing market and high household debt make Canada very vulnerable to rising interest rates. Inflation in Canada rose to a 39-year high of 7.7% in May. The rise in inflation is still subject to external factors and supply issues. But unfortunately, raising interest rates will not help solve these problems, and may even exacerbate them.
Gold is now converting support and resistance again. The previous low range of 1752-1753 has become the next resistance point, and then the upper and lower rails of the purple channel. On the overall rhythm, before breaking the downtrend, it will still maintain the trend of lower highs and lower lows.
Today’s gold price corresponds to the support below 1732-1731, followed by 1724 and 1710. The resistance point near the price of gold today is the range of 1752-1753, followed by the resistance points 1765 and 1768 determined by the last rebound overnight, which are also the lower rail positions of the purple channel line.