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Weekly Summary (17/01/2022)

US inflation and epidemic situation form medium-term support for gold price

Last week the overall gold price rose slightly, reached a high position 1830 and closed at 1816. Affected by the macro information, the chairman of the Federal Reserve made relatively mild remarks last week which weakened the market's expectation of raising interest rates to a certain extent. At the same time, the CPI data released on Wednesday showed that the US market inflation continued to be higher and was resulting in the relative decline of the US dollar, supporting the gold price to continue hovering above 1810. However, the call of the Federal Reserve to raise interest rates in March was too high and the Omicron virus still spread widely in the United States, limiting the momentum of the continuous rise of gold prices.

The market generally expects that the Fed's interest rate hike will be quite strong. The minutes of the December meeting show that the Fed will reduce its bond purchase and reduce the size of its total assets. The market is also extremely positive about the interest rate hike in March. At the same time it believed that the interest rate will be raised continuously for 3-4 times in 2022.

High inflation is also an important obstacle to the dollar and employment. The Fed predicts that inflationary pressure will continue until the middle of the year. If sustained inflation occurs and the CPI data has been rising, the Fed will respond at the policy level which is raising interest rates in many times.

The US CPI index rose 7% in December, hitting a 40 year highest position. Affected by the epidemic the economic supply chain and inflation in the United States are serious. The retail industry and traditional industries transfer the increase of costs to consumer shopping malls, resulting in the rise of prices and service prices, forming the living burden of residents, increasing the living burden of American families and the difficulty of maintaining the basic life of poor families, As a result, inflation data rose, leading to a new vicious circle.

The high-speed spread of Omicron made major global institutions lower their expectations for the economy this year, thus providing expected support for gold prices. The number of new people infected with Omicron variant in the United States continues to rise. European medical institutions predict that half of the European population will be infected with Omicron by March. Pessimistic estimates and expectations of the impact on the market supply chain and the persistence of soybean milk will increase and stimulate the price of gold.

This week's strategy:

Boz the fundamental information still effective in stimulating the market, the overall price may continue to remain in the range of 1800-1830 without significant decline. In this range, long and short trading can be carried out according to technical indicators, pay attention to the remarks of the Federal Reserve and the relevant news of Omicron and generally consider the market trend with reference to the volatile upward market.

Technical analysis: the price has upward pressure and enters the short-term range of shock decline


Last week the price generally showed an upward trend. The 5-day moving average crossed the 10-day moving average at one time with an obvious upward trend. The second half of the period mainly showed a trend of shock entanglement and the price mainly fluctuated up and down in the 1810-30 range. At the end of the week, there is a downward trend, the 5-day moving average goes down, MACD index shows a downward trend, and the downward kinetic energy is more obvious.

Important data of this week:

Wednesday: 21:30 initial jobless claims in the United States for the week ended January 15 (10000)

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