ATFXUnder the global monetary tightening environment, gold is unlikely to have outstanding performance

internationalgoldThe main purpose of is risk hedging, and the largest single buyer is the central banks of various countries, which are the core force in trend formation. When the Federal Reserve implements loose monetary policy and leads to sustained depreciation of the US dollar, in order to avoidforeign exchangeReserves are damaged, and other central banks tend to buy gold in large quantities to replace some of their holdings of US dollars and US bonds or to lower the proportion of US dollars and US bonds. In the absence of widespread geopolitical conflicts, the medium - to long-term trend of international gold prices is mainly determined by four factors: the US economy, the Federal Reserve, the US dollar, and US Treasury bonds.

The focal point of the US economy remains high inflation.8Monthly comprehensiveCPIGrowth rate from8.5%Fallback to8.3%But the coreCPIfrom5.9%Rebound to6.3%The data points are inconsistent, and the inflection point of inflation seems to come and go.CPIOn the same day of the data release, US President Biden stated in his speech that "more time and determination are needed to reduce inflation," which has led to a rapid shift in market expectations from a volatile state to the continuation of high inflation. High inflation means excess demand and overheating of the economy, and gold is more likely to appreciate in times of economic recession. Currently, the performance of the US economy does not support the strengthening of international gold prices. In fact, the international gold price has broken through twice2000The US dollar barrier is all due to concerns about economic recession:2020year7The COVID-19 pandemic is raging, the economic outlook is bleak, and gold prices are soaring2005USD; this year3In September, Russia Ukraine Chong suddenly broke out, and the risk aversion suddenly increased, and the gold price rose2078USD.



The pace of the Federal Reserve's aggressive interest rate hikes is unlikely to change. Since the beginning of this year, the Federal Reserve has raised interest rates a total of four times, with each rate hike ranging from25Expand the base point to75Base point. Even though some market funds are concerned that raising interest rates too quickly may lead to an economic recession, the Federal Reserve still goes its own way.8At the end of the month, Powell said in a speech, 'History has strongly warned us not to relax monetary policy too early.'. This Thursday, the Federal Reserve will announce the latest interest rate decision results, raising interest rates75The probability of a base point is the highest, and it cannot be ruled out that an unexpected interest rate hike may occur100Possible basis points. It is expected that Powell will revisit topics such as the necessity of raising interest rates, the continued high inflation in the United States, and the good performance of the labor market at the press conference. During the questioning session, there may be content related to "aggressive interest rate hikes leading to economic recession", and it is necessary to observe Powell's wording when answering. Under the expectation of interest rate hikes, gold prices are likely to come under pressure and decline in the first four trading days of this week. Only when Powell's speech was not as tough as expected, did the gold price have a chance for a brief rebound.   

The US dollar index is experiencing a new strong cycle and is expected to break through within the year115Pass. Once a trend is formed, it will not easily change. last year5From now on, the US dollar index has continuously broken through95、100、105and110At the four major checkpoints, the bullish trend is significant. Although there is a risk of overbought, there is no characteristic of building a top, so it is not advisable to be bearish too early. It is not ruled out that the US dollar index may experience a temporary pullback in a bullish trend, but there is a high probability that it will regain its upward momentum and reach new highs after the pullback ends. The US dollar index and international gold prices are fluctuating, and in a strong US dollar cycle, it is difficult for international gold prices to exceed expectations.

The issue of the upside down of the US long-term and short-term treasury bond bond yields cannot be ignored. Latest yield of one-year US Treasury bonds3.97%, higher than6The yield of one month US Treasury bonds3.84%However, the yield of two-year US Treasury bonds3.92%Below the yield of one-year US Treasury bonds.8At the beginning of the month, the critical period for the inversion of long and short-term bond yields was still two years, but not long after, the critical period for inversion was shortened to one year. This means that market funds are betting that the Federal Reserve will stop its aggressive interest rate hike path earlier. Once interest rate hikes are stopped, the US dollar index will lose its momentum to continue rising, and gold will once again receive attention from central banks around the world.

The technical trend structure of gold also needs to be taken seriously. The basic conclusion is: monthly line level, gold2020year7The trend from the month to the present, a perfect replica2011year8Month to2012year9Monthly trend. According to the basic theory of technical analysis that 'history repeats itself', gold prices are likely to continue to decline significantly in the coming years. In the short to medium term,1700The integer level of the US dollar is an important support level, and once the market price deviates significantly from this level, the technical top structure will be confirmed. If long and short forces surround1700If the US dollar continues to compete but does not break, the long-term view will shift from a bottoming out decline to a high-level oscillation.               

ATFXThe analyst team believes that under the strong US dollar cycle, there is no sustained upward trend in the monetary environment for gold. Unless the tension in the Russia-Ukraine conflict escalates or the economic situation in the United States takes a major turn, the central banks of all countries will not have enough reason to buy gold on a large scale.

*Risk Tips and Disclaimers*
There are risks in the market and investment should be cautious. The above contents only represent the views of analysts and do not constitute any operational recommendations.

2022-09-21