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The price of gold has fallen for six weeks, is it time to buy gold?

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发表于 2018-8-27 16:03:49 | 显示全部楼层 |阅读模式
For some commodity analysts, it may be the perfect time to buy gold, because the US monetary policy seems to weaken the support of the dollar.
The remarks made by Fed Chairman Powell during the Jackson Hole Central Bank’s annual meeting were regarded by economists as neutral to dovish, and the four-month decline in gold seems to have come to an abrupt end. The gold price ended the six-week decline and refreshed the best weekly gain since the end of March. Gold futures for December delivery on the New York Mercantile Exchange closed at $1213.5 an ounce on Friday (August 24), up more than 2% from the previous week.

Gold seems to be the best performer in the precious metals market, and silver's performance is still poor. September silver futures prices closed at $14.795 per ounce on August 24, up more than 1% from the previous week.

Bill Baruch, president of Blue Line Futures, said he has turned completely into bullish gold and is looking for a push to push the price of gold to $1,250 an ounce. He added that his company is advising its customers to actively do more gold and closely monitor positions. He said: "This change in gold is what we have been waiting for."

Fed monetary policy began to become more neutral
Powell barely provided new guidance on future monetary policy, triggering a new round of gold rebound. Although Powell said that the US economy has greatly increased, he is relatively neutral on the current monetary policy.

In his speech at the annual meeting of the Jackson Hole Central Bank, he mentioned that the risk of overheating in the US economy does not seem to rise.

CMC Markets market strategist David Madden said that this may be perfect for US monetary policy. He added that he saw Powell’s speech as “anticipating the brakes” for monetary policy expectations.

Madden believes that the message conveyed by Powell's speech is that everything is stable, which may be good for gold. Madden believes that because of the strong US economy, the market expects the Fed to be more "doves."

Simon Derrick, general manager of BNY Mellon, said that the Fed’s recent remarks have “fired” the dollar’s ​​already faltering environment. He added that Powell’s remarks may indicate that the dollar has peaked and the price of gold has bottomed out.

Investors are waiting to ignite the "spark" of the rebound in gold prices

Ole Hansen, head of commodities strategy at Saxo Bank, said the dollar is expected to undergo major changes in order to push up the price of gold. However, once this happens, there is not much that can stop the gold price from rebounding.

He explained that the speculative position of bearish gold at historical highs will push up the price of gold. He said: "The price of gold has a possibility of rebounding by 50 dollars. I think that it is necessary to break the level of $1210 to really push the gold price back."

According to the latest data released by the US Futures Trading Commission (CFTC), as of the week of August 21, the speculative net position of COMEX gold futures increased by 5022 contracts, and the number of short positions reached a record high. However, the German commercial bank believes that the gold market is about to usher in a large-scale short-covering, or stimulate the price of gold. The bank expects the price of gold to return to $1,300 by the end of the year.

Many investors believe that the price of gold is at a key resistance level at $1,250 per ounce, while some investors point out that $1,236 per ounce is the first point that gold prices need to cross.

The US economy is beginning to see "cracks"
Not only did the Fed begin to become more neutral in monetary policy, but some economists began to emphasize the growing weakness of the US economy.

David Rosenberg, chief economist and strategist at Gluskin Shef, pointed out that as of August 23, 14 economic indicators have fallen short of expectations so far this month.

Ole Hansen also supports the uncertain US economic outlook. He is closely watching the Citi Surprise Index. Recent data shows that US economic data is deteriorating, while European economic data is growing.

Hansen added that the narrowing of the gap between the US and Europe's two major economies may support the strength of the euro against the dollar, which will benefit the gold price.

Some economists point out that although the US economy has enough momentum to support another rate hike this year, this prospect will have more uncertainty in 2019. At present, the market expects the Fed to raise interest rates by more than 90% in September this year, and the probability of the Fed raising interest rates for the fourth time this year is more than 60%. However, the market believes that the possibility of the Fed raising interest rates once before September 2019 is only 50%.

What makes the market even more uneasy is the trade conflict between the United States and China. Madden said that although global trade issues have not affected US economic growth, this is a problem that investors cannot ignore. The longer the global trade issue lasts, the higher the risk to the US economy.

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