International spot gold on Wednesday (June 10) intraday, trading at $1,716 / oz area, the previous session of the gold price all the way up choppy, bulls for the second consecutive day of counterattack and to close up the positive line. The current session so far, gold prices are temporarily a narrow consolidation trading.
Spot gold rose as high as $1,720.60 an ounce in early morning trading at $1,697.62 and dipped as low as $1,691.67, up $16.51, or 0.97 percent, to settle at $1,714.13.
Meanwhile, COMEX gold futures for August delivery closed up 1.0 percent at $1,721.90 an ounce.
Goldman Sachs said gold could rise above $2,000 an ounce as long as the Fed decides to tolerate above-target inflation. Goldman reiterated its 12-month base case forecast of $1,800.
George Gero, managing director of Wealth Management at Royal Bank of Canada, said gold had been bought in the form of short covering as stock index futures gave up some of their recent strength. Markets also continue to expect dovish monetary policy ahead of this week’s Meeting of the Federal Open Market Committee. Gold is expected to be volatile this week with a lot of economic and political news. In the long term, gold is expected to reach $1,800 an ounce.
“The prospect of further Fed stimulus has been the number one factor supporting gold prices over the past few days, while stocks around the world have fallen slightly across the board,” said David Meger, director of metals trading at High Ridge Futures. “We are seeing unprecedented levels of global liquidity and the underlying fundamental environment is extremely favourable for gold.”
“We’re seeing a tentative return of risk aversion… Despite the dollar’s rebound, gold prices rose as liquidity returned to the market. With gold already above $1,700 resistance, the rally could continue if stocks fall further.”
Brokers AxiCrop, chief market strategist at Stephen Innes thinks, “gold is in a reasonable and stable downward trend, most likely due to good performance in the stock market, and over the past few weeks after quick funds into the market is expected to continue to meet high performance, short gold, in other words, the golden short-term rebound will be short of opportunity.”
Fed chairman Colin Powell will hold a press conference at 02:30 a.m. Thursday Beijing time ahead of the fed’s decision on interest rates.
After holding emergency meetings in March, cutting interest rates to near zero and launching a series of credit programs, the Fed is not expected to make a major policy decision when it concludes its two-day meeting on Wednesday.
Notably, Fed policymakers will release their first economic forecasts since December. The forecasts, due in March, were shelved because the economic fog was so thick that policymakers saw no point in guessing the outlook for unemployment, inflation and growth.
Risk confidence in markets has erupted recently, stocks have surged and the Fed meeting is likely to weigh in on recent signs of economic recovery. In addition, attention should be paid to widely speculated yield curve controls and negative interest rates.
Michael Feroli, an economist at jpmorgan in New York, said that while the U.S. labor market appears to be improving, he expects the Fed to maintain its broadly biased view and that there are significant risks in the future.
“While we see some recent momentum against the dollar taking a breather, we are not prepared to buy the dollar until we hear from Powell and his colleagues,” Wells Fargo said in a research note. If the Fed continues to say no to negative rates and seriously avoids opening the door to yield curve control, we could see the dollar continue to rally.”
The US CPI for May will also be released at 20:30 Beijing time. U.S. consumer prices are expected to rise at a 0.3 percent annualized rate in May after rising 1.3 percent in May, according to a media survey.
If U.S. inflation comes in significantly lower than expected, it will cause another dollar sell-off and gold will take the opportunity to rally further, and vice versa.
On the daily chart, the U.S. dollar index continued its downward trend, with the MACD green momentum slightly narrowed and the KDJ random index slightly under pressure, indicating that the downward momentum of the U.S. dollar is still in place but on hold and the overall weakness remains unchanged.
In the 4-hour chart, the DOLLAR index struggled in a narrow range at its low, the MACD green momentum column was looming, and the KDJ random index came under pressure, indicating that the short-term momentum of the DOLLAR is still weak and the coming trend will continue to be weak.
On the daily chart, gold rebounded from its recent lows and broke through its 20-day moving average before continuing to support above its 60-day moving average. The MACD green momentum column narrowed slightly and the KDJ random index turned higher, indicating that gold’s rebound momentum strengthened and further upside was expected.
The 4-hour chart shows gold maintaining a rally from its recent low of $1670.42 / Troy ounce, with a slightly enlarged MACD red momentum column and a slightly higher KDJ stochastic index, indicating that gold’s short-term rebound momentum has strengthened somewhat and will continue to expand in the coming months.
Fundamentals positive factors:
- According to statistics from Worldometers, as of 08:38 on June 10, the cumulative number of confirmed cases of COVID-19 worldwide has exceeded 7.31 million, with 7,312,198 confirmed cases and 413,003 deaths. In the United States, there have been more than 2.04 million confirmed cases of COVID-19 — 2,045,549 — and more than 110,000 deaths — 114,148.
- On June 9 local time, U.S. infectious disease expert Dr. Fauci warned again that COVID-19 is one of the worst infectious diseases in human history, with no end in sight.
- On the afternoon of June 9, the Ministry of Education issued the first warning of studying abroad this year, reminding students to do a good job in risk assessment and choose to go to Australia or return to Australia for study.
- On June 9, the DPRK unilaterally announced that it would cut off all communication lines between the DPRK and the ROK, and that it would completely cut off and abolish all communication lines maintained through the Joint Liaison Office between the DPRK and the ROK from 12:00 local time on June 9. South Korea’s Yonhap News Agency reported on June 9 that the Unification Ministry of the Republic of Korea (ROK) said in response to the DPRK’s announcement that all communication channels between the ROK and the DPRK have been closed.
Fundamentals negative factors:
- CNN reported on June 9 local time that the US State Department plans to reopen the US Consulate General in Wuhan around June 22. The State Department has informed Congress.
- A day after New York City reopened for the first time, Mayor Bill DE Blasio gave an update. Calling it an “extraordinary” day in New York City, Mr. DE Blasio said Tuesday that the citywide ratio of novel Coronavirus positive was 1%, well below the 15% threshold. Mr. DE Blasio called it “incredibly good news.”
- On June 8, the Pentagon announced the lifting of the travel ban on five countries and 39 U.S. states. Five are Bahrain, Belgium, Germany, Japan and the United Kingdom. The Pentagon said all 44 countries and the US had “met the conditions for lifting travel restrictions”. California, Florida and North Carolina are among the states not yet eligible to lift travel restrictions.
- New York City will reopen on Monday. The death toll in New York City, which had been enforcing home orders for 78 consecutive days, exceeded all but six countries. New York City, the largest and most densely populated city in the United States, once the epicenter of the outbreak, on Monday entered the first phase of its reopening plan to allow nonessential workers in construction and manufacturing to return to work and retail stores to provide pickup services on the roadside or in stores.