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Weekly Summary (25/4/2022)

The USD entered the betting cycle and commodities continued under pressure

Last week, number of Fed officials including Fed chairman Powell made hawkish remarks which pushed the dollar index to break through the 101 mark and reach a two-year high. Under this pressure, spot gold plunged more than $50 throughout the week. It opened in 1929 on Monday and continued to decline after opening and currently in 1915. As the market has locked in the expectation that the Fed will raise interest rates by 50 basis points at the policy meeting in May, traders are now betting that the Fed will raise interest rates continuously in the next few months.

Fed chairman Powell said on Thursday that the Fed may raise the federal funds rate by 50 basis points at its policy meeting next month and said a similar rate increase may be needed thereafter. "In my opinion, it is appropriate to accelerate the pace of interest rate hike. Raising interest rates by 50 basis points is one of the options discussed at the May meeting," Powell said at a panel discussion hosted by the International Monetary Fund In terms of inflation, Powell admitted that inflation now very high and it is appropriate to accelerate the rate of interest rate hike. According to the data released by the US Department of labor, the US consumer price index (CPI) increased by 8.5% year-on-year in March, the highest level since December 1981. This is also the US CPI exceeding 6% for six consecutive months. The Fed will hold its next interest rate meeting on May 3-4, and the market's expected probability of raising interest rates by 50 basis points at this meeting is still very high.

At present, the impact of the Russian and Ukrainian war and the Russian information sector on gold has been relatively limited. The market is mainly focused on the US dollar entering the interest rate increase cycle. The rapid and strong rise of the US dollar has put a heavy pressure on gold and other hedging products, and gold, silver and other bulk commodities will gradually move towards the market with low prices in the short term.

Gold is currently in the 1915 range and likely to fall below 1900 this week The bearish market is mainly considered in this week with the target range of 1900-1850.

Technical analysis:

Last week, the market entered the lower track direction of brin belt in the early stage and then crossed the middle line upward to form a W-shaped interval. Then it fell below the middle line again, forming the main trend of the market. The price continuously moves downward on the lower track line and the price path is relatively clear. It opened in 1929 on Monday, and then continued to decline. At present, it is in the position of 1915, which is in a volatile downward market.

Important information of this week:

Tuesday: 20:30  monthly rate of durable goods orders in March (%)

Thursday: 20:30  annualized quarterly rate of real GDP in the first quarter of the United States (%)


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