September 11 News During the intraday European session, spot gold continued to rebound and is currently trading around $1,728 an ounce, and is expected to close up again after three weeks. But gold bulls still need to be wary of the Fed’s hawkish policy, and gold may fall further in the long run.
Spot gold opened at $1,708.19 per ounce. As of press time, spot gold temporarily recorded $1,727.91 per ounce, an increase of 1.12%.
Nomura raises expectations for Fed rate hikes in September and November
A report by economists at Nomura Securities, led by Aichi Amemiya, expects the Fed to raise interest rates by 75 basis points in September and 50 basis points in November, a 25 basis point increase from their previous forecast. .
Comments from members of the Federal Open Market Committee (FOMC) in recent weeks suggest that in order to more effectively address high inflation, the Fed needs to raise rates aggressively and raise the overall level of the federal funds rate,” the report said.
Economists at Nomura believe there are four main factors behind the urgency for the Fed to raise rates by 75 basis points in September:Fed officials appear to be “increasingly concerned” that the short-term neutral rate will rise due to inflation trends or rising inflation expectations;
Even though inflation may have peaked, Fed officials are now more concerned with the exact value of the “top”, which is still a mystery;
The US financial environment is still relatively loose.
At a time when Fed officials’ rhetoric has become more “hawkish”, the bond market has priced in that the Fed will be on a more aggressive policy rate path, opening the door to faster rate hikes.
Meanwhile, Nomura economists maintained their forecast for the Fed to raise rates by 25 basis points in both December and February, which would bring the federal funds rate to a “neutral level” of 4%-4.25%.
The Fed’s determination to fight inflation remains unabated, gold may fall further
“At current levels, gold appears to have bottomed out in the short term,” said Michael Langford, director of consultancy AirGuide. “But the strength of the labor market will continue to dominate the Fed’s view of economic fundamentals.”
The number of Americans filing for unemployment benefits fell for the fourth consecutive week in the week ended Sept. 3, data released showed, underscoring the strength of the labor market and bolstering expectations for continued aggressive interest rate hikes by the Federal Reserve.
Even as the U.S. unemployment rate rose in August, it was largely due to a rise in the labor force participation rate as more people entered the labor market in search of work. So this is not bad news for Fed hawks.
Federal Reserve Chairman Jerome Powell said the central bank is “firmly committed” to fighting inflation and remains on track to continue the policy path it has opened and control price spikes without paying “very high social costs”.
The Fed’s firm determination to fight inflation has also been repeatedly confirmed by other officials recently. Fed Vice Chairman Brainard said the Fed needs to take restrictive measures for a period of time as long as it can reduce inflation. Collins, the new president of the Boston Fed, said in an interview that although the Fed has raised interest rates sharply, “there is still more work to be done.”
The European Central Bank sharply raised interest rates by 75 basis points overnight, the largest single rate hike since the late 1990s. But the ECB is far less hawkish than the Fed, which is expected to raise rates by 75 basis points for the third straight time at its policy meeting this month. Overall, there is a lack of good news for gold bulls waiting for the Fed to adjust policy.
The latest data from the CME Group showed that open interest in gold futures increased by 838 contracts on Thursday, partially reversing the previous session’s decline; trading volume followed closely, increasing by about 6,600 contracts. This shows that the gold price is more likely to fall further, and the lower support looks to the year’s low of $1,680 an ounce.
technical analysis
Judging from the daily chart, the low level is volatile; the price of gold has held the key mid- to long-term support near 1680 for many times, and held steady above this support, the bulls’ morale is encouraged; KDJ’s low gold fork continues well, the MACD green column shrinks, and the short-term favors bulls , continue to pay attention to the resistance near the low of 1727.69 on August 22. The price of gold was blocked at this position twice on Tuesday and Thursday. If it can break through this resistance, it is expected to open up new upside and test the resistance near the 55-day moving average at 1750.08. ; In the short term, there is still some resistance near the 21-day moving average at 1737.84. The resistance at the August 25 high is near 1765.36.
If the price of gold continues to be suppressed by the resistance near 1727.69 and unexpectedly falls below the 5-day moving average of 1711.75, it will increase the short-term bearish signal. Further resistance refers to the 1700 mark and last week’s low of 1688.71.