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Weekly Summary (26/7/2022)

Spot gold is expected to end its rally from the previous two sessions on Monday (25 July) as market sentiment tends to be cautious ahead of a sharp Federal Reserve rate hike later this week. US Treasury Secretary Yellen warned of a slowdown in the US economy but said a recession was not inevitable. Even if the economic data continues to be negative in the second quarter, it will not indicate that a recession has started as the job market and demand are both strong.

Although inflation reached more than a 40-year high of 9.1% year-on-year in June and the market once expected the Fed to extend its rate hike to 100 basis points this month, Fed officials ruled out the possibility of a 100 basis point hike at their July 26-27 meeting, instead extending the June hike by 75 basis points.

Last week, the European Central Bank joined the global fight against inflation at any cost - exceeding expectations for a 50 basis point rate hike. In a subsequent interview with German media, ECB President Lagarde said that the ECB would raise rates until inflation fell back to its 2% target.

As a result, after last week's back-to-back declines, spot gold was in rally mode this week, with prices rising from a low of 1680 to the 1720 range. Close to the expected time frame for a rate hike, prices will get a bigger boost and focus on the uptrend this week. Price target 1750.

Technical analysis.

Prices started to rise at the end of last week, breaking through the middle line of the Bollinger band on the line and entering an upward range into the upper orbit range. Up to now has always remained in the upper orbit, rising momentum is relatively strong, the highest reached 1740 position. Today the price has pulled back, falling back to 1714, the overall still maintains upward momentum, showing an upward trend.

Important information in the week.

Thursday: 02:00 US July federal funds rate target ceiling (%)

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