During the European session on Monday (June 17th), the spot gold price fell slightly, with a mid-price of $2318.8 per ounce, a decrease of 0.59%. After a rise of more than 1% last Friday, spot gold was in a disadvantaged position at the beginning of the new week. In terms of product structure, products with revenue of ¥100-300 billion have operating incomes of ¥401/1288/60 million respectively.
Last week, the spot gold closing price rose, ending three consecutive weeks of decline. On Friday, the price of gold continued to rise despite the rebound of the US dollar index. The main reason for the strong US dollar is the weakness of the euro. In the continuing political turmoil in France, the euro fell below 1.07 points, which also hurt European indices and weakened other risk-sensitive currencies.
Last Friday, the European continental stock indices fell by 1.5% to 3.2% but rebounded on Monday. As the yield spread of 10-year government bonds in France and Germany continued to widen, the safe-haven trading triggered on Friday further boosted the attractiveness of gold. At the same time, the Bank of Japan ambiguously announced that it would reduce the scale of bond purchases in the future, but the specific quantity was unclear, which also suppressed bond yields and further boosted the attractiveness of zero-yield and low-yield safe assets such as gold, silver and Swiss francs.
However, even though the US dollar remains strong, the overall forecast for gold is still favorable. In recent years, especially this year, gold has always been the preferred tool for hedging against inflation, as higher-than-expected inflation in recent years has caused legal currencies to lose purchasing power. Despite the high interest rates of central banks and the enticing nominal returns of government bonds, gold has still risen and maintained its value. Although global inflation has eased, the process of anti-inflation has always been slow. The Fed lowered its interest rate expectations this week, which caused a slight negative reaction among gold traders who had expected policy normalization to accelerate. But worsening economic data may stimulate new optimism for interest rate cuts, which could boost gold prices.
The forecast for gold is still favorable even though the US dollar is strong.
Gold has been the first choice tool for hedging against inflation, especially this year, as higher-than-expected inflation in recent years has caused legal currencies to lose purchasing power. Despite the high interest rates of central banks and the enticing nominal returns of government bonds, gold has still risen and maintained its value. Although global inflation has eased, the process of anti-inflation has always been slow. The Fed lowered its interest rate expectations this week, which caused a slight negative reaction among gold traders who had expected policy normalization to accelerate. But worsening economic data may stimulate new optimism for interest rate cuts, which could boost gold prices.
However, high inflation and wage data may delay policy normalization and may weaken the attractiveness of gold. Major central banks such as the European Central Bank and the Swiss National Bank have already begun to cut interest rates, while other central banks such as the Bank of England and the Federal Reserve are expected to follow suit later in the third quarter. The magnitude of future interest rate cuts depends on the upcoming economic data, and a greater-than-expected interest rate cut may further push up gold prices. Despite this, due to recent high inflation and legal currency depreciation, demand for gold may remain strong, thereby limiting the downward risk of gold prices in the latter half of this year.
Gold forecast: technical analysis
(Spot gold daily chart, source: EASTMONEY)
The rebound of gold last Friday was a positive signal, but gold is currently in a consolidation phase and needs to be patient. Given that the Fed meeting and CPI data have been released, the stock market may rebound soon. The bulls have pushed the gold price above the short-term resistance level of $2330, but the gold price needs to hold this level to send a reversal signal.
The new week has just begun. The ideal situation at the beginning of this week is that the bulls push the gold price above the short-term downtrend line near 2360 US dollars. Although there have been several attempts to fall below $2300, this support level is still strong. Encouragingly, there was no bearish follow-up after the selling triggered by the better-than-expected employment report last Friday. However, if there is another daily closing price lower than $2300 in the coming week, the short-term prediction of spot gold will be slightly bearish, which may lead to further short-term selling towards the next support level at $2222.
At 20:00 Beijing time, spot gold was reported at $2318.06 per ounce with a decrease of 0.62%.