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Weekly Summary (14/6/2022)

Gold continues to fall on expectations of rate hikes

Monday (June 13), spot gold fell nearly 1%, almost all the gains in the previous session, as the dollar index rose to a new high of 104.917 since May 13, hot U.S. inflation data is expected to force the Fed to deepen its aggressive rate hike policy, the future of how to fight inflation on the verge of getting out of control will become the focus of market attention. Fed officials hope to push up interest rates without damaging the labor market and without causing the economy to fall into recession, but being forced to accelerate rate hikes in response to high inflation will make it a difficult task.

Fed policymakers will release their projections for the ultimate goal of the current round of rate hikes at the end of this week's meeting. The Fed will also forecast how high the unemployment rate (currently at 3.6%) could rise before the economy slows enough to lower inflation.

Following a 50 basis point rate hike in May and the launch of balance sheet reduction this month, Fed policymakers are almost committed to continuing to raise rates by 50 basis points each at this week's and July's meetings. And some agencies are even predicting that the Fed will not rule out a 75 basis point hike this week.

This week, spot gold will continue the downtrend, the current price has touched the 1820 position, and this week may further down to the 1800 integer level.

Technical analysis.

Late last week the price up trend is strong, the highest touched 1878 position then reversed the pattern down, this week after the opening continued to downtrend and now fallen to 1822 position. For MACD, above zero axis momentum gradually weakened which is guiding the downward trend will continue to maintain, the lowest may be down to 1820 position.

Important information for this week :

Wednesday: 20:30 U.S. monthly retail sales rate in May (%)

Thursday: 02:00 U.S. June federal funds rate target ceiling (%)

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