[ad_1]
I asked this question a few weeks ago and I ask it again with solutions: Was the decline in gold proportional to the Jackson Hole speculation and could it go further?
No one knows, except maybe Jerome himself, what the Fed chairman will announce today regarding the central bank’s plan for its $ 120 billion monthly stimulus spending.
While many would agree that these asset purchases virtually saved the nation from financial collapse at the onset of the pandemic, a growing number now believe that the Fed is in fact choking the very economy it once saved it, via inflation.
The federal stimulus package is accused of boosting inflation in the United States, with economic growth for the second quarter of 2021 estimated at 6.6% on Thursday – well above the 3.5% drop seen over the whole of 2020 by 6.5% for the whole of 2021.
In addition to asset purchases from the central bank, the Biden administration has managed to exceed more than $ 1 trillion in Covid-related spending since the president took office in January. This week, Democratic lawmakers allied with Biden also presented a $ 3.5 trillion additional spending plan to advance his economic agenda.
The Fed maintains an annual inflation target of 2%. But the US consumer price index, a widely followed measure of inflation, rose 5.4% over the one-year period in June.
More importantly, the Fed’s preferred measure of inflation, its core indicator of personal consumption spending, rose 3.5% in the year through June – its highest level in 30 years.
At least three senior Federal Reserve officials – Robert Kaplan of Dallas, James Bullard of St. Louis and Esther George of Kansas City – spoke forcefully on Thursday about the need to cut stimulus, adding to the pressure on Powell a few hours before he gets on the board. podium at the annual Jackson Hole summit.
The event, which typically takes place in Jackson Hole, Wyoming, but is held virtually for the second year in a row due to the coronavirus pandemic, has often been used by Federal Reserve policymakers in the past to provide direction on their future policy. The event will be broadcast live as the Federal Reserve Conference of Central Banks in Kansas City.
Basis expected for Fed to reduce asset purchases at least
Many investors seem to believe Powell will have a more conciliatory tone in his 10:00 a.m.ET (2:00 p.m. GMT, 5:00 p.m. ET) speech, according to a Reuters report that quotes Fiera Capital portfolio manager Candice Bangsund:
“While President Powell is likely to… lay the groundwork for possible deleveraging from asset purchases, we expect him to err on the side of caution and patience this week as the macroeconomic landscape turns. has deteriorated since the political meeting in July, “said Candice Bangsund. . , portfolio manager at Fiera Capital in Montreal, Canada.
The rough market consensus is that Powell is likely to report a decrease in asset purchases over the past quarter, giving a clear signal in a meeting ahead of the actual announcement.
Kyosuke Suzuki, chairman of financial technology firm Ryobi Systems, added in the same report:
“For Powell, there is no merit in specifying the exact timing of the decline in today’s speech. If he doesn’t give a clear hint, it will be somewhat positive for stocks.”
On the currency front, risk-sensitive currencies should rise in a downturn, while the yen should weaken in that case.
The big question, at least for those who have insisted on this story, is where does that leave the gold?
Gold loses the will to push hard above $ 1,800
As precious metals strategist David Song noted in a blog post to Daily FX on Thursday, gold broke the 50-day simple moving average, or simple moving average, of $ 1,790, “but it’s running low. momentum to stay above the moving average. “
Such a result could undermine the recent rally in gold as the index develops a negative slope, Song wrote, adding:
“It looks like the recent rally has stalled ahead of the monthly high ($ 1,832) as it struggles to maintain the lead since the start of the week.”
“As a result, a change in the Fed’s forecast could undermine bullion’s rally, and lack of momentum to stay above the 50-day SMA ($ 1,790) would put gold on a bearish outlook. given that “the cross of death” formed in August “.
However, the rebound from the monthly low ($ 1,682) could turn into a correction in the broad sense and not a change in market behavior, as the 50-day ($ 1,790) and 200-day (1810) simple moving averages $) become negative. Slope, Song said.
Separately, Rekha Chauhan, another gold blogger, wrote on FX Street that from a technical standpoint, gold was again challenging the 21-day moving average, or daily moving average, $ 1,785.
Chauhan said:
“A daily close below the most recent could confirm a bearish reversal after the 200-day moving average was rejected at $ 1,810 earlier this week.”
“This shows the bears next stop on weeklong lows and that the August 16 low at $ 1,771 could play a role. Alternatively, the reestablishment of the 50-day moving average to $ 1,791 on a sustainable basis is essential to attempt a recovery. Significant towards the $ 1,800 level. “
Credit Suisse said in a note released Thursday that gold rebounded sharply from its March lows of $ 1,679.80 / $ 1,677.83, hitting the 200-day moving average of $ 1,810 .
: ضاف:
“We expect this to push back progress at least in the initial testing and lead to further consolidation.”
“We will allow a drop to $ 1,750, which is the June 29 low, and allow an attempt to stabilize there. Short-term risks are also on the downside, but longer term they are. somewhat neutral / sideways. “
Credit Suisse also forecast major resistance at the mid-July high of $ 1,834, saying a move above was needed to retest the June 4, 1856/57 low and $ 1,874 in 2020- 2021.
The support at $ 1,679 / 77 consolidates with the June 2020 low of $ 1,670. The Swiss banking group added that below $ 1,670, the 2018-2021 uptrend would be targeted at $ 1,587 . “
Will gold see another medium chance of hitting $ 1600?
So how much is gold dipping from here?
Getting back to the intermediate level – $ 1,600, Song explains, it’s likely:
“(A) Lack of momentum to hold above 50 days ($ 1,790) could push gold below $ 1,786 (38.2% expansion) to bring the Fibonacci overlap around 1 $ 743 (23.6% expansion) to $ 1,763 (50%) rebound) on the agenda. “
“The next area of interest is around $ 1,690 (61.8% retracement) to $ 1,695 (61.8% expansion), with the monthly low breaking $ 1,682 and opening $ 1,670 ( 50% expansion).
Disclaimer: Barani Krishnan uses a range of opinions outside of his vision to bring diversity to his analysis of any market. For the sake of neutrality, it sometimes presents conflicting views and market variables. He also does not trade in the commodities and equity markets he writes about.
[ad_2]
Source link
