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Weekly Summary (29/11/2021)

Interest raise background give the gold price press ,virus may cause short-term rebound

Spot gold fell for two consecutive weeks and arrived to lowest position of 1749 in last week. First, due to Powell's re-election, the latest information of the Federal Reserve held a positive attitude towards raising interest rates which raised the market's expectations for raise interest rates. More dollars entered the storage range for preparing to raise interest rates so that most of the funds in the gold market were withdrawn, which increased the opportunity cost of holding gold spot and the gold price fell continuously. In view of the persistent inflation, the high expectation of interest rate increase likely to come sooner or later and the gold price is likely to be further suppressed.

The 24th Meeting of the Federal Reserve showed that it expressed more positive attitude towards raising interest rates. If prices continue to rise and the job market weaken, the Fed may significantly raise interest rates. The Fed's meeting focused on inflationary pressure. It is generally believed that the rapid rise in the price of energy such as crude oil drives the rise in commodity prices which makes inflation more intense and then increases the cost of living of residents. The Fed must focus on this phenomenon and raising interest rates is the best means to control at present.

Goldman predicts that in order to control inflation in 2022, the Federal Reserve is likely to raise interest rates earlier than June and tighten monetary policy earlier than expected. The interest rate hike cycle is usually very unfavorable to gold and the market needs to anticipate a panic decline. In addition, new virus variants are also an important variable affecting the market.

The new coronavirus pneumonia variant virus appears to be a hot market and providing support for gold prices and limiting the downside.

South Africa discovered new COVID-19 variants on Thursday with mutation and infectivity stronger. This virus has been stored in many provinces of South Africa. This news may promote the upward rebound of gold. The specific situation depends on the market reaction this week. Although it may trigger the risk aversion of the gold market, it may only be a short-term effect. Under the background of raising interest rates, the medium and long-term price of gold is not optimistic.

This week focuses on the ADP employment data in the United States and the trend of the mutated virus. Under the expected interest rate increase, the employment market data is very sensitive and may determine the medium-term trend of the market. In addition, considering the market impact of risk aversion factors, the epidemic of virus also has a decisive impact on the market in the short term. Overall, the market may continue to run at a low level or enter a falling range this week, and the short-term rebound may be limited by the virus. The specific focus range is 1750-1800

Technical analysis:

The price fluctuated at 1790 in the early part of last week and fell sharply to a two-week lowest of 1749 at the end of the week. Then it rebounded slightly upward to 1814 and continued to fall before the closing and closed at 1750.
The Bollinger belt kept a narrow range in the early stage of the week. The price fell too violently, so that the index did not respond too much. When the price rebounded upward, the exposure of the Bollinger belt expanded and the closing price was in the lower track range, which was in a downward trend.

MACD is in the downward trend indication as a whole. In the short term, the fast and slow line crosses the zero axis with the price rebound, but the subsequent decline again makes the double line below the zero axis. The kinetic energy line is in the downward trend, indicating that the price is in the downward trend.

After Monday's opening, focus on observing the exposure of brin belt to confirm whether the price is in the low rebound range.

Important information this week:

Wednesday: 21:15 US November ADP employment (10000)
Thursday: 21:30 US initial jobless claims for the week ended November 27 (10000)
Friday: 21:30 US unemployment rate in November (%)
Friday: 23:00 final value of October durable goods order rate in the United States (%)

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