Gold market analysis

Gold prices are expected to complete a short-term decline. 1/8 09:30am Finalized

The Fed's decision to keep interest rates unchanged has supported the strengthening of the US dollar, putting pressure on gold prices. However, after hitting a low of $3,268 in the late New York session on Wednesday, gold gradually regained lost ground. Yesterday, in the early European session, it approached $3,315, surpassing my expected level of $3,305. However, it soon retreated. Subsequently, gold prices were further affected by the expansion of the US June PCE growth rate, falling back below $3,300 in the early New York session yesterday. As of this morning in the Asian session, gold prices have been fluctuating narrowly below that level. 

The Fed's interest rate statement and Powell's speech have reduced the possibility of a rate cut in September. Interest rate futures show that the market expects a 0.25% rate cut in September with only a 38.2% probability, while the probability of maintaining the interest rate unchanged is 61.8%. The probability of a 0.25% rate cut in October is only 46.8%. Tonight, the US Department of Labor will release the July non-farm payroll report. Non-farm payrolls are expected to increase by 106,000, less than the 147,000 in June. The unemployment rate is expected to rise by 0.1 percentage point to 4.2%. However, the chance of a rate cut in September is slim, and the US employment data seems unlikely to support a significant reversal of the gold price's weakness. 

The 20-day and 50-day moving averages form medium-term resistance. 

From the daily chart, gold has broken through the 20-day SMA (3337) and the 50-day SMA (3341). It is believed that these two moving averages have become the main resistance for the medium-term rebound. On the other hand, after falling to 3245.5 and 3247.8 dollars at the end of May and June respectively, gold reversed direction on the same day and closed with a bullish candle. Therefore, investors should pay attention that if gold tests 3245 dollars again in the future and closes with a bearish candle, or fails to rebound and fluctuates narrowly around that level, it is expected that gold will break down and the first target for the decline will still be 3225 dollars. 

From the hourly chart, the gold price has rebounded by more than 46 dollars from the low of 3,268 dollars after the Fed's interest rate announcement, which is only slightly more than 23.6% of the biggest decline since July 23. If it rebounds by 38.2% to 3,333.48 dollars, it will be the level that the gold price has repeatedly broken through on Tuesday and Wednesday this week but has been met with heavy selling pressure. If the Fibonacci extension line is used to measure the trend since July 30, and the extent reaches 100%, the gold price will fall to 3,249.19 dollars. 

Gold price at 3,268 may show a double bottom rebound. 

However, it is also necessary to note that the gold price may test the previous low of $3,268 and then find support. Even if it slightly breaks through this level, it is possible to see a double bottom rebound. Therefore, when the gold price drops to the range of $3,268 to $3,249, investors should pay attention to the reversal signals on the hourly chart. For the time being, it is judged that the gold price will end the decline since July 23rd today and start a rebound wave again next week. Based on the current calculation, it is expected to encounter resistance at $3,315 and $3,334 during this period. The 20-day and 50-day SMA are regarded as the ultimate upward targets. After that, it is expected to fall again. 

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

MTF Special Analyst Zheng Guangfu