Original title: Fed weight reduction pressure greatly reduced, but institutions issued a warning to gold bulls?
Gold prices retreated from an one-week high on Monday as the dollar rose slightly, but US consumer confidence fell sharply, easing some fears that the Fed would scale back its bond purchases. However, UBSUBS Group AG has warned investors that they should reconsider their investments in gold as the global economy recovers and the dollar is expected to strengthen next year.
The higher dollar puts pressure on the gold price, but the Fed may ease the pressure of reducing the size.
The gold market opened high on Monday, but failed to maintain its momentum and continued to face pressure near the $1780 mark. The yield on US Treasuries was 1.273 per cent, down nearly 3 per cent on the day because of disappointing US consumer sentiment. However, geopolitical tensions and concerns about Delta mutants in the Asia-Pacific region have intensified.
The dollar index stabilized again, putting pressure on gold prices.
Gold prices rose 1.5 per cent on Friday after data showed that US consumer confidence fell sharply to its lowest level in a decade in early August, easing investor concerns about the Fed scaling back its bond purchases. While a growing number of policy makers have been talking about scaling back bond purchases as soon as possible and the possibility of raising interest rates, mixed economic data released last week convinced the market that the Fed might delay raising interest rates.
Harshal Barot, senior research consultant for South Asia at Metals Focus, said the expectation now is
Given the continued rise in COVID-19 cases, the Fed may not significantly scale back its bond-buying program or advance its plan to scale back its bond purchases for the first time.
The sharp volatility in gold prices on Friday also triggered some small profit-taking on Monday, he said.
"towards the end of the year, we are likely to see some decline in gold prices, which currently face strong technical resistance of $1785," said Margaret Yang, a strategist at DailyFX.
As the economic situation improves, UBS warns bulls to "evacuate" in time.
As the dollar rose slightly, the price of gold fell. UBS Group AG has warned investors to reconsider their gold holdings as the global economy recovers and the dollar strengthens next year.
UBS Global Wealth Management CIO Office
Schneider, head of commodities and Asia-Pacific FX, said: "for gold, if you have a tactical position investment plan, abandon it; if you have a strategic position, hedge it, when the economic situation is getting better." there is no reason to hold so many safe haven assets, holding gold just means that the market needs to be balanced at a lower level. "
Schneider said on Monday that gold could fall to nearly $1600 an ounce, while silver could fall to $22 or less. Platinum may be a better investment in precious metals because of its greater exposure to industry, he said.
Investors are now looking forward to the minutes of the Fed's July meeting on Wednesday and Fed Chairman Colin Powell's speech on Tuesday. Monthly US retail sales data may also provide further clues to consumer confidence. At the same time, the political uncertainty caused by the fall of the Afghan government will also be closely watched.
John Feeney, business development manager at Sydney-based gold trader Guardian Gold Australia, said investors were likely to look at retail sales data to measure the strength of the country's recovery. "Gold is now back above the level it was at the start of trading last Monday, recovering last week's decline, so we expect the August 9 low to be an important medium-term bottom," he said. "
At present, the gold market lacks a clear direction, although the timing and extent of the Fed's recent reduction in bond construction is still one of the biggest concerns in the future. However, as the global economy recovers from the epidemic and inflation shows signs of falling, the upside in gold prices is weakening. Investors continue to keep an eye on national economic data for further clues to the medium-and long-term direction of gold prices.
Spot gold was at $1774.8 an ounce at 19:08 Beijing time.