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Weekly Summary (25/10/2021)

Powell's speech suppressed gold prices and still remained supported in the mid-term

Gold fluctuated greatly in last week with the highest position reaching 1813 which supported by the continuous decline of the US dollar index. At the end of last week fed Powell's speech restrained the price and made a wide-ranging fall to the 1780 region, finally closed at 1793.

The prospect of the Fed raising interest rates basically confirmed the market's expectation that inflation would continue. In this situation gold became a popular and effective tool to fight inflation which steadily pushed up the upward trend of gold prices in past two weeks. At the same time silver also reached the highest point in a month and a half last week.

Fed chairman Powell said last Friday that the Fed should appropriately reduce its asset purchases but it has not yet reached the measure of raising interest rates. Us non-farm data have been significantly lower than expected for two consecutive months but economic data at other levels make the Fed still need tightening measures for the time being. He made it clear that in terms of assets, the Federal Reserve should reduce bond purchases because the epidemic has reduced many jobs in the United State and inflation will weaken next year.

The downward trend of the US dollar index has continued for two consecutive weeks. Hit by inflation risk sentiment, the US dollar is under pressure in the short term which drives the stock market to rise sharply. The S & P 500 index hit a new high on Thursday and closed up for seven consecutive trading days. Other indexes also have higher data one after another.

This week, although the remarks of the Federal Reserve have a great impact on gold in the short term, the views of medium and long-term traders on inflation and other fundamentals will not change much. We can still expect buy side from the macro level this week.

Technical analysis:

On the 1 hour chart, we can clearly seen that the gold price was relatively narrow in the early stage last week. In the second half it quickly rose to 1813 at the top. The brin belt channel was relatively stable as a whole and the channel volume was narrow. At the end of last week stimulated by the remarks of the Federal Reserve, the exposure opened to welcome the downward correction of the price. After piercing the middle track downward the price rose to the middle line again, Although it is still in the seller's area but can also be seen that the upward momentum still exists.

It can be seen from MACD that this week's price makes the fast and slow line almost always above the zero axis and in the buyer's market. Although the price pattern of the tail is not very optimistic, it does not pull the speed line to explore the zero axis and the buyer still has opportunities.

After open of this week, focus on observing the exposure of brin belt and the relative trend of price to the zero axis.

Important data of this week

Thursday: 20:30 initial jobless claims in the United States for the week ended October 23 (10000)

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