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Weekly Summary (13/09/2021)

The USD index rebounded and gold suffered pressure

Gold price fell in last week and as lowest position in 1781 ,closed at 1789 at the end of the week. The USD index rebounded causing gold to suffer pressure. The market is expected that the Fed will start buying less bonds in this year which putting pressure on gold and making gold prices fall for four consecutive days.

The US non-farm employment data in August were far lower than expected and the new delta virus was rampant which gave gold a certain degree of support. However, the Fed's policy is still the main factor affecting the gold price. Due to the recovery of the US dollar and the negative correlation effect with gold, the gold price will be in a downturn for a certain period of time.

Powell's speech at the annual meeting of the global central bank was regarded by the market as dove speech. Although the market is expected to reduce bond purchases, the Fed shows no signs of concrete action. However, the general expectation of the market also puts great pressure on gold.

Different with the Fed's vague statements, the ECB made it clear on Thursday that it would reduce the size of debt purchases in the coming quarter and gradually end its financial rescue to COVID-19.

Last year, the European Central Bank made every effort to save the economy because of the outbreak of the new crown and the devastation of the European economy. Now, high vaccination rates across Europe have enhanced the prospects for recovery and policymakers are under pressure to admit that the worst is over. The European Central Bank has responded by slowing down the debt purchase of the pandemic emergency asset purchase plan.

The market expects that the European Central Bank will make this major decision in December. At that time the European Central Bank will comprehensively evaluate its bond purchase plan, observe the impact of the new virus on the economy and have a better grasp of the direction of the Fed's exit from the stimulus plan.

This week, we need to focus on the Fed's expectations of reducing bond purchases and raising interest rates. Based on non-farm data and PPI data, the Fed is less likely to raise interest rates this year but we need to pay attention to the impact of sudden remarks and forecasts on the short term. On the other hand, we also need to pay attention to the spread of the epidemic and its impact on the economy. It is expected that the price may not change greatly this week, and there is a great possibility of upward shock.

Technical analysis:

Affected by fundamental the gold prices fell sharply in last week. But the deviation from the moving average is small which always present entangled link form. It shows that the price remains stable and low after a round of decline. MACD kinetic energy line is relatively stable. In the callback, the speed line crosses the zero axis and showing optimism market mood.

Important data in this week::

Tuesday: 20:30  US August CPI annual rate data

Thursday: 20:30  US retail sales data for August

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