On Wednesday (June 26), the price of gold fell nearly 1%, hitting a low of $2293.49, the lowest level since June 10, and closed at a low price of $2297.91 an ounce.
Recently, the market continues to absorb the possibility that the Federal Reserve is unlikely to adjust (interest rates) early in the summer. As a result, US bond yields have been high recently. The indicator US 10-year bond yield hit the highest in nearly two weeks; the US dollar rose 0.4% on Wednesday, and hit an intraday high of 106.13 US dollars in the past two months. Gold's recent rebound has been suppressed as a result, making it difficult for the upward trend to continue. In the past two trading days, it has continued to fall to a new low in two weeks. On Wednesday, new home sales in the US fell to a six-month low in May, falling short of expectations. According to data from the Ministry of Commerce, new home sales plummeted 11.3% month-on-month in May, at an annual rate of 619,000 units after seasonal adjustments. Although the data further shows that the world's largest economy is slowing down, the US dollar reacted modestly to this data. The market's focus will be on the US Personal Consumption Expenditure (PCE) price index announced on Friday, which is the Federal Reserve's preferred inflation indicator. Investors want to know from this whether price pressure in the economy is moving in the right direction. If the data falls short of expectations, it may prompt investors to increase their bets on interest rate cuts this year, thereby benefiting gold to a certain extent. However, according to an analysis by Eugene Epstein, Moneycorp's head of North American structures in New Jersey, “PCE data is unlikely to fluctuate too much compared to the CPI (Consumer Price Index).” In other words, unless PCE changes drastically, it will still be difficult to influence the Federal Reserve's attitude of maintaining high interest rates in the short term. Furthermore, the results of the annual “stress test” announced by the Federal Reserve on Wednesday showed that large US banks will have sufficient capital to withstand severe economic and market turbulence. The test results showed that 31 large banks will be able to withstand the test of a sharp rise in unemployment, sharp market fluctuations, and a sharp decline in the residential and commercial mortgage markets, and still have sufficient capital to continue lending. This shows that the current high cost of borrowing will not pose a huge risk to the financial system. This news is also one of the reasons why gold is under heavy pressure. In the short term, gold appears to be under a lot of pressure from negative news.
Source: Yi Huitong
At the technical level, judging from the daily chart, the price of gold continues to fall close to the bottom of the wide fluctuation range over the past two months. The technical indicator MACD signal line began to show signs of decline from an intertwined state, indicating that gold is still weak in the short term. Currently, the lower overnight low of $2293.49 is the initial support. If it falls below, the support at the bottom of the broad fluctuation range of $2,284 is particularly critical. If it falls further below this position, there are few strong support points below, so be careful to prevent the risk of a sharp retracement. Of course, the key is to pay attention to what kind of fluctuation the US personal consumption expenditure (PCE) price index will have this Friday.
Bank of China Guangdong Branch Wang Gang
This is a personal opinion only and does not represent the views of your organization