On Tuesday (June 11th), gold rose slightly by 0.2% driven by bearish position adjustment, closing at $2,316.26/ounce. Investors are cautious as they await key US inflation data and the end of the two-day monetary policy meeting by the Federal Reserve on Wednesday.
For two consecutive trading days since the beginning of this week, gold has maintained a slight adjustment and rebound, slightly stabilizing near the $2,300 level. However, investors remain cautious due to their nervousness about the Federal Reserve meeting on Wednesday. The Federal Reserve will announce its interest rate decision during the US trading session on Thursday. The market participants currently expect the Federal Reserve to maintain interest rates unchanged, and the probability of this situation as indicated by the federal funds futures is 99%. Therefore, in addition to the press conference by the Federal Reserve Chairman Powell after the decision, we should also pay attention to the accompanying statement by the Federal Reserve. If the Fed decision-makers seem to take a more hawkish stance, that is, indicating that interest rates may need to be maintained at a higher level for a longer period of time, thereby overturning the market's current expectation of a rate cut at the November meeting, this may provide support for the US dollar and suppress metal prices, and vice versa. On the other hand, The Federal Reserve's dot plot will be published simultaneously with the interest rate decision. The dot plot is essentially the Federal Reserve decision-makers' prediction of future interest rate levels. Therefore, if the dot plot is raised, indicating that interest rates will remain at a higher level for a longer period of time and the number of interest rate cuts is expected to decrease in the near future, it may support the US dollar and exert pressure on metal prices, and vice versa. Another obstacle that gold traders may be facing is the announcement of US May CPI inflation rate, which is expected to reach 3.4% YoY overall, unchanged from the previous value. However, the YoY core CPI inflation rate is expected to show a slight relief of inflation pressure, and economists expect the figure to reach 3.5%, lower than the previous value of 3.6%. However, the market seems to attach more importance to the overall CPI inflation rate, as it may increase the pressure on the Federal Reserve to maintain the current interest rate level for a longer period of time to cope with the inflation pressure on the US economy. In summary, the adjustment pressure faced by gold at present is still difficult to relieve.
Source: E-huitong
Technically, gold has rebounded slightly for two consecutive days, but the strength of the bull rebound is weak. Currently, the area of the June low of 2315 has not been able to break through, and the moving averages are diverging downward. The RSI indicator on the daily chart is currently approaching 40, indicating that the bearish sentiment in the market has not dissipated. If the support level of last week's low of $2285 is further breached, the retracement will further increase. On the other hand, to take a bullish view, a clear breakthrough of the $2327 resistance level and breaking through last week's high of $2387 are required before there is hope of reversing the downward trend.
Wang Gang, Bank of China Guangdong Branch
For personal views only, not representative of the views of the organization.