Gold market analysis

Gold prices have been weak this week. 11/8 09:55 am Finalized. 

Gold prices consolidated at high levels last Friday as expected. Although the Financial Times reported that according to a letter from the US Customs and Border Protection on July 31, gold bars of 1 kilogram and 100 ounces were to be classified as taxable, the specific details have not been made public. The news caused gold prices to drop sharply at one point, but then reports emerged that the White House would clarify that this was false information, and gold prices rebounded significantly. The daily trading range expanded to between $3,377 and $3,404. 

Inclusion of virtual currencies in 401(k) plans or a blow to gold prices? 

Last Thursday, Trump signed an executive order allowing alternative assets such as cryptocurrencies to be included in 401(k) plans, meaning that pension funds can purchase Bitcoin and Ethereum. In fact, the Michigan State Pension Fund has already bought 300,000 shares of ARK Bitcoin ETF and 460,000 shares of Grayscale Ethereum Trust to hold Bitcoin and Ethereum. What I want to say is that in the situation where investors have few other choices, this executive order will lead more funds to flow into the virtual currency market in an attempt to obtain greater returns, which will pose a certain degree of threat to the more traditional gold market. 

$3,338 is an important intraday support level. 

Although I expected the gold price to consolidate last Friday and then peak today before a significant adjustment, the key point is that it reflects the short-term peak of the gold price today. The spot gold price has continued to decline in the Asian market this morning and has broken through the TD ascending trend line on the hourly chart. The measured decline target is approximately $3,343, which is regarded as the first support level. If it adjusts by 50% of the largest increase since July 31, it will reach $3,338.55, which is considered an important support level for the day. At that time, $3,372 will become the short-term resistance for the rebound. Due to the obvious downward trend of the gold price this morning, it is almost impossible to break through $3,400 again within the day. A strong rebound to $3,390 is the limit. 

The US will release the CPI for July tomorrow. The market expects the overall year-on-year increase to slightly expand from 2.7% to 2.8%, and the core CPI year-on-year increase to expand from 2.9% to 3%. This may cause investors to reassess whether the Federal Reserve will cut interest rates in September, or further push down the gold price. Therefore, it is expected that the gold price will be weak this week. 

The above content is for reference only and does not constitute investment advice. 

MTF Special Analyst Zheng Guangfu