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Weekly Summary (07/02/2022)

The USD entered the raising interest zone and gold price was under pressure in long term

Spot gold basically showed downward trend last week which was ending the previous rise and forming an inverted V-shaped reverse market. The USD entered the interest rate increase cycle and gold basically entered the downward cycle. However, in the overall range there are many factors supporting the gold price. Such as the poor non-farm data on Friday and the risk aversion caused by the epidemic situation all play a role in stabilizing the gold price in the short-term market.

The U.S. non-farm employment data in December was far less than expected. With the rise of new infections of Omicron virus, economic and commercial activities were seriously infected the normal operation of the real economy, resulting in an impact on the short-term employment data. However, the unemployment data released on Friday and the non-farm data were more optimistic with strong wage growth, which also provided follow-up impetus for new employment. After the non-farm data were released, the gold price began to fluctuate and the gold price finally rose slightly.

The market's expectation of the Fed's interest rate in March is relatively enthusiastic and there is little response to the cooling of non-farm data. JPMorgan and other institutions are expected to raise interest rates in March which is basically a foregone conclusion. As for the contraction time of the Fed's balance sheet, economists began to expect the second half of the year. The Deutsche Bank team expects to start in the third quarter. Barclays on Friday will advance its forecast from the fourth quarter to the third quarter.

WHO (WHO) officials said on Tuesday that there has more evidence that COVID-19 Omicron mutation is affecting the upper respiratory tract, causing symptoms that are lighter than previous variants. But that doesn't mean the virus can be despised. At present, the daily increase in the United States has affected the economic operation and has a trend of global spread. However, under the background of strong expectation of interest rate increase, the risk aversion to the virus has little impact on the monthly trend of gold.

This week, the gold price may still hover at a low level and the main price is likely to fluctuate in the 1790-1810 range. We need to continue to pay attention to the situation of Omicron virus. In the short term, we can trade long and short in the range of 1790-1810. We also need to pay attention to the increase or decrease of the market's expected heat for raising interest rates.

Technical analysis:

Last week, the price began to decline from the 1830 range and entered the downward channel, and fell to the lowest position of 1781, forming an inverted V-shaped decline reversal. The 5-day moving average pierced the 10-day moving average when the market opened last week, and has been below the 10-day moving average since then. The downward trend is obvious. At the end of the week it pierced the 10 day moving average again which is currently above the 10 day moving average and out of an upward trend.

The kinetic energy distribution on MACD is relatively average. The latter half of last week basically showed upward kinetic energy with a reverse upward trend. The speed line also touches the zero axis and the upward kinetic energy is more obvious.

Important data of this week:

Wednesday: 21:30 US December CPI annual rate  (%)

Thursday: 21:30 US December PPI annual rate (%)

Friday: 21:30 US December retail sales rate (%)

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