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Weekly Summary (21/6/2022)

Dollar hike range caused gold continues under pressure

Monday (June 20), spot gold under pressure to the downside, the overall downward trend on Monday and the current price in the 1835 range, the dollar index drop retracemen but did not bring good to the gold market, the market maintained expectations that the Fed will increase hawkishness. Federal Reserve Chairman Jerome Powell will testify in the Senate and House of Representatives on Wednesday and Thursday this week, respectively. Notably, Powell will face a difficult task: both to acknowledge that the economy is facing a potential recession and to justify the latest rate hike of 75 basis points.

Last week, the Fed raised interest rates by 75 basis points and hinted at further increases. Then in its biennial monetary policy report to Congress, the Fed said it was "unconditionally" committed to fighting inflation, despite the rising risk of recession.

Policymakers now expect the Fed's benchmark overnight rate (currently in the range of 1.50%-1.75%) to rise to at least 3.4% in the next six months. And one year ago, most believed the rate would need to remain at near-zero levels by 2023. Almost all Fed policymakers have become hawks in the face of the highest level of inflation in nearly 40 years.

On the medium-term line, gold is mainly running in the 1800-1800 range and has not broken out of the 1800 range. At present, the U.S. prices rose, the economy was affected accordingly, but because to counteract the stronger inflation situation, the Fed's interest rate hike policy will continue to maintain, in this context, gold will continue to maintain the downward trend of pressure in the short and medium term.

Strategy for the week.

Given that the dollar will stabilize and retrace in the context of interest rate hikes, gold will continue to maintain a downward pressure market during the week, the current 1830 range may be broken in the short term and can be considered for a downward target of 1800.

Technical analysis.

Last week gold short term to achieve a breakthrough, the highest into the 1855 range, the late downward adjustment, into the downside of the market, but the price has stabilized relatively. Price floating density is small. Bollinger band openings gradually narrowed, the price is now in the lower orbit of the Bollinger band, there is no obvious upward momentum, this week will continue to appear downward market.

Important information for this week.

Thursday: 20:30 U.S. initial jobless claims for the week ending June 13 (million)

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