XAUUSD: Is Gold going up?

Traders' Opinions

Summary:

My trading recommendation is through taking a close look on the demand area near 1830 as this area may be a possible reaction point to start another set of buying pressure for the XAUUSD.

Last week has got to be one of the most hellish trading weeks we’ve seen for quite a while. With majority of FX pairs showing seemingly unending impulses together with commodities going down with the market’s cyclical pull, I profess that the opportunities the market has provided to us last week was less than a handful.

The same story went for XAUUSD last week as it finally gave in to the selling pressure the market has been going through for the past few days--with it nearly closing through the 1800 level.

But with all that said, will we finally see Gold bounce back?

Here’s what we think;

In the daily chart, it is clear that we saw XAUUSD sweep liquidity from the most recent high. However, the liquidity sweep of the previous high was not enough to sustain the move--and have a candle close below the most recent swing low. Following the rule of market structures, if price fails to take down previous low, then this may be an indicator that price has willingness to go high.

Zooming in to the 4 hour time frame, we could see that structure has already confirmed willingness to go up as it has formed a change of character and a close above the past high. With so, these simple actiosn alone are signs that Bulls can bounce and are currently in control.

My trading recommendation is through taking a close look on the demand area near 1830 as this area may be a possible reaction point to start another set of buying pressure for the XAUUSD.

As always, trade at your own risk.

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Comments

Add to Favorites

FastBull Featured

Remarks of Officials

Christine Lagarde, President of the European Central Bank (ECB), delivered a speech at the Hearing of the European Parliament on Monday (June 20), with the main points as follows.

Economic Outlook

Euro area activity is being dampened by high energy costs, intensified supply disruptions and greater uncertainty, which affect the manufacturing sector in particular. At the same time, activity in the services sector is supporting growth and the recovery in this sector is expected to strengthen over the coming months.

Growth is expected to be 2.8% in 2022 and 2.1% in both 2023 and 2024.

Wage growth picks up moderately and is expected to strengthen slightly further in 2022 and then to remain above average levels for the projection horizon.

Annual inflation is projected to be 6.8% in 2022 before declining to 3.5% in 2023 and 2.1% in 2024.

Monetary Policy

Net asset purchases under the asset purchase programme (APP) will be ended as of July 1, 2022.

The key ECB interest rates will be raised by 25 basis points at the July monetary policy meeting because the conditions underlying the forward guidance have been satisfied.

Another rate hike will be seen in September and the scale will depend on medium-term inflation. If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting.

The ECB will apply flexibility in reinvesting redemptions coming due in the PEPP portfolio, with a view to preserving the functioning of the monetary policy transmission mechanism.

Lagarde's Speech

Risk Warnings and Disclaimers

Comments

Add to Favorites

Owen Li

Central Bank

The Philippine central bank will raise rates by a modest 25 basis points for a second straight meeting in June, opting to move more slowly than its global peers in an attempt to cool soaring inflation, a Reuters poll forecast.

With the economy in the Southeast Asian nation recovering smartly from the pandemic and inflation at a more than three-year high of 5.4%, the Bangko Sentral ng Pilipinas (BSP) is under pressure to act now to prevent the economy from overheating.

On Monday, incoming governor Felipe Medalla signalled the prospect of a series of rate hikes this year that could extend up to 2023 to tame inflation, adding he preferred a gradual unwinding of easy monetary policy.

The June 13-20 Reuters poll showed nearly three-quarters of economists, 16 of 22, expected the BSP to hike its key overnight reverse repurchase facility rate by 25 basis points to 2.50% at its June 23 meeting.

But six economists said the central bank may opt for a 50 basis point increase after the U.S. Federal Reserve's big interest rate hike last week and the expectation of more moves ahead to bring down high inflation.

"Arguably, the BSP does not have adequate incentives to deliver outsized rates of 50bp or more, even though some market expectations have shifted to a 50 bp hike at the June 23 meeting," said Lavanya Venkateswaran, economist at Mizuho Bank.

"Not the least because the BSP's attempt to engineer a soft landing may be compromised by such aggressive actions as the economic recovery remains fragile and uneven," she added.

With the BSP's views on rate hikes falling short of expectations, the Philippine peso dropped to its lowest level in more than three and a half years, down nearly 6% this year.

While a depreciating peso is supportive for exports, it would add more price pressures as the pass-through of imported inflation becomes higher, pressing the central bank to go for a jumbo 50 basis point rate hike.

"BSP Governor Benjamin Diokno signalled a 25 bp increase but we think the beleaguered currency and accelerating inflation will be enough to force a punchier 50 bp rate hike from BSP," said Nicholas Mapa, a senior economist at ING.

Economists in the poll expect the BSP to pick up its tightening pace. Nearly half, 8 of 18 economists forecast the central bank to hike rates to 3.00% by end-September, and two expected it to reach 3.25% or higher.

While medians showed rates at 3.0% by end-2022, nearly half, 8 of 18 economists forecast rates at 3.50% or higher.

More interest rate rises are seen further out - from a smaller sample who had forecasts going to the end of next year, 6 of 11 economists forecast rates at 4.00% or higher, back to where they were before the COVID-19 pandemic.

Source: Ruerters

Risk Warnings and Disclaimers

Comments

Add to Favorites

Winkelmann

Central Bank

Australia's top central banker on Tuesday flagged a lot more policy tightening ahead as rates were still "very low" and it was important that higher inflation did not feed into public expectations and wage claims.

Yet, Reserve Bank of Australia (RBA) Governor Philip Lowe also played down the chance of rates being increased by a super-sized 75 basis points and took issue with market pricing of rates reaching as high as 4% by year end.

Lowe warned price pressures continued to build both globally and domestically and inflation was now seen reaching 7% by the end of the year, up from a previous forecast of 6%.

That would be the highest pace in decades and far above the RBA's long-term target band of 2-3%.

"As we chart our way back to 2 to 3% inflation, Australians should be prepared for more interest rate increases," warned Lowe in a speech. "The level of interest rates is still very low for an economy with low unemployment and that is experiencing high inflation."

The official cash rate is currently at 0.85% having been lifted by 50 basis points earlier this month following an initial quarter-point hike in May.

Minutes of its June meeting out on Tuesday, showed the central bank's board discussed raising the cash rate by either 25 basis points or 50 basis points and chose the latter because policy needed to be "normalised" to head off inflation.

Since then, the U.S. Federal Reserve has hiked by 75 basis points fuelling speculation the RBA might match it.

"At the moment, the decision we will take is either 25 or 50 again at the next meeting," Lowe said when questioned on it.

He also noted that matching market wagers of 4% by year end would require the sharpest tightening cycle in modern RBA history and would badly hit consumer spending.

"I think it would slow the economy a lot," Lowe said. "I don't think it is particularly likely."

Investors responded by pricing out the chance of a hike of 75 basis points in July and trimming projections for the end of the year, though rates are still seen at 3.5%.

Lowe emphasised the RBA would be watching how household spending responded to rising borrowing costs given real wages were falling and house prices were easing from their highs.

Still, he said it was important that inflation expectations remain anchored around 2-3% and that higher prices now did not feed through to expectations of rising inflation in the future.

"Higher interest rates have a role to play here, by helping ensure that spending grows broadly in line with the economy's capacity to produce goods and services," said Lowe.

Source: Reuters

Risk Warnings and Disclaimers

Comments

Add to Favorites

FastBull Featured

Daily News

【Quick Facts】

1. Global sovereign wealth funds increases their holdings of unlisted assets significantly last year.

2. ECB president reiterates plans to raise interest rates in July and September and hints that rate hikes could coincide with a halt in asset purchases.

3. Fed hawkish officials warn that inflation expectations could be unstable if no action is taken.

4. Macron's parliamentary election setback will limit his planned reform during his second term.

5. The Russia-Ukraine conflict pushes up LNG vessels charter rates, and orders for new vessels soared several times.

6. The authorities in the Russian-occupied areas of Ukraine will waive residents' outstanding loans to win their support.

【News Details】

Global sovereign wealth funds increases their holdings of unlisted assets significantly last year

The International Forum of Sovereign Wealth Funds (IFSWF) has released its annual report, showing that unlisted assets account for 70.4% of investments by global sovereign wealth funds in 2021, a significant increase from 56.9% in 2020; correspondingly, the proportion of allocation to listed assets fell from 43.1% to 29.6%.

In 2021, sovereign wealth funds invested $5.8 billion in 133 startups at different stages of the venture capital cycle, up nearly 40% from 2020, with the investment cases increasing by 77% to 75, according to the report; among them, sovereign wealth funds prefer to invest in those in growth stages (Series C and D funding), recording 58 deals totaling $2.4 billion in 2021.

ECB president reiterates plans to raise interest rates in July and September and hints that rate hikes could coincide with a halt in asset purchases

President of the European Central Bank (ECB) Christine Lagarde said the commitment to stop net asset purchases before raising interest rates was made at "another time." This is a statement that implies officials are more open to implementing both policies simultaneously in the future.

Fed hawkish officials warn that inflation expectations could be unstable if no action is taken

Federal Reserve Bank of St. Louis President James Bullard, the Federal Reserve's most hawkish official, said inflation expectations could become unstable if the Fed does not take credible action.

Macron's parliamentary election setback will limit his planned reform during his second term

On June 19, 2022, France held the second round of voting for the 2022 parliamentary elections, officially electing 577 members of the legislative body National Assembly. The incumbent President Emmanuel Macron, who won the presidential re-election in April, has lost his absolute majority in Parliament by a wide margin, which will make it difficult for the new government to form a cabinet.

In contrast, the left-wing coalition of several left-wing parties and the far-right party "National Rally" have both increased their parliamentary seats significantly, once again reflecting the upward trend of both the radical left and the radical right in this year's French election.

According to the final voting results released by the French Ministry of Interior, the centrist ruling coalition "Ensemble" under Macron suffered a heavy blow, winning only 246 parliamentary seats in total. Although it remains the top power, the 246 seats shrunk significantly compared to the 350 seats won by candidates under Macron in the 2017 parliamentary elections and failed to reach the threshold of 289 seats, i.e. more than half of the parliament seats. Thus it is unable to form a separate cabinet.

The Russia-Ukraine conflict pushes up LNG vessels charter rates, and orders for new vessels soared several times

The Russia-Ukraine conflict has changed the way gas is imported into Europe, pushing up gas prices. Robust shipping demand from European and Asian buyers has kept LNG vessel charter rates climbing.

According to shipbroker Poten & Partners, daily charter rates for LNG vessels (on the benchmark route from Sabine, U.S., to Tokyo, Japan) reached nearly $100,000 on June 17, up about 50 percent from last summer and about three times the rate at the beginning of the year.

A senior LNG market researcher believes that the current high freight rates in the LNG shipping market are related to the fact that buyers are booking vessels in advance for this winter's peak shipping season. The industry is tending to lengthen vessel charters. For buyers, this will ensure the availability of vessels to deliver LNG this winter, helping lock in the peak shipping season this year, while for sellers, it will undoubtedly reduce the risk of idle vessels and volatile freight rates.

Plamen Natzkoff, head of commodity analysis at shipping data firm Vessels Value, agrees that LNG vessel freight rates were volatile last winter, peaking at $350,000 per day for a short period of time in the peak shipping season. The experience of tight capacity and volatile freight rates last winter has led buyers to sign up early this summer to lock in LNG winter capacity, leading to a tight spare capacity in the spot market.

Another force pushing up LNG vessel charter rates is strong demand. "Regardless of the vessel type and wherever the vessel is, the demand side is chartering as fast as possible." Plamen Natzkoff told Caixin that demand for LNG vessels has increased significantly after the Russia-Ukraine conflict as Europe continues to purchase LNG from the U.S. and elsewhere to replace pipeline gas from Russia.

The authorities in the Russian-occupied areas of Ukraine will waive residents' outstanding loans to win their support

It has been nearly four months since the full-scale outbreak of the Russia-Ukraine conflict on February 24, when Russian troops crossed the ceasefire line stipulated in the Minsk agreements and entered Ukrainian territory in force.

Since the end of April, the progress of the war in Ukraine has become much slower than in the first two months of the conflict as Russian forces have reined in the focus of their offensive to the Donbas region and sought to entrench the occupation by Russian and pro-Russian forces in parts of Kharkiv region, southern Zaporizhzhia, and most of Kherson region.

In addition to military operations, it is a new focus for the outside world to observe the Russia-Ukraine war that how Russian troops, pro-Russian forces, and pro-Russian political figures in the Russian-occupied areas of Ukraine cooperate with each other to carry out acts of governance in the new areas under Russian control.

【Today's Focus】

16:00 Eurozone Current Account (SA) (Apr)

Risk Warnings and Disclaimers

Comments

Add to Favorites

Jason

Central Bank

Nearly 70% of academic economists recently surveyed by the Financial Times in partnership with the Initiative on Global Markets at the University of Chicago's Booth School of Business expect the U.S. economy to fall into a recession in 2023.

Of those that expect the next U.S. recession to begin next year, most predict the downturn to start in the first and second quarters.

Signs pointing to a U.S. recession

In the first quarter of this year, the U.S. economy shrank 1.5% year over year, the first drop in GDP since the second quarter of 2020 at the height of the lockdowns. And while many economists expect a recovery in the current quarter, uncertainties continue to cloud their outlook due to geopolitical issues and supply chain bottlenecks that can be partly attributed to the lockdowns in China.

While the U.S. unemployment rate in May was steady for the third straight month at 3.6% and non-farm payrolls rose by 390,000 last month, some Fed officials fear that their efforts to counter inflation by raising interest rates may lead to higher unemployment, The Wall Street Journal reported last week.

"We definitely could see unemployment moving up somewhat, but not in a huge way," New York Fed President John Williams told reporters over a month ago. About a week later, Powell told WSJ in an interview that achieving a "soft landing" does not mean that the unemployment rate needs to remain at 3.6%, "which is a very, very low rate."

Former New York Fed chief Bill Dudley in early May said it is "very, very unlikely" that the Fed can tame inflation without sparking recession as the central bank still needs to push the unemployment rate.Getting unemployment to just 4.25% would be a "masterful performance by the central bank," Fed governor Christopher Waller said in a speech less than a month ago.

Taming inflation without a recession

While many experts believe the probability of a recession is increasing, some are still hopeful that the Fed can achieve its inflation targets without a recession, citing the continued strength of the labor market and more than $2 trillion in excess cash on household balance sheets, according to Bloomberg.

Moody's Analytics chief economist Mark Zandi is optimistic that the Fed can pull it off.

"I still think we're going to navigate through without a recession. But obviously it's going to be very, very tight because risks are very high," Bloomberg quoted Zandi as saying.

Former Fed official and Deutsche Bank economist Peter Hooper was among the early ones to predict a recession, although he says he can still see some scenarios for avoiding one, while Goldman Sachs Chairman Lloyd Blankfein, in a tweet earlier this month, said riskier times are ahead, but the economy "may land softly."

"Dial back a bit the negativity on the economic outlook. If I'm managing a big company of course I'm prepping for the worst. But the economy is starting from a strong place, with more jobs than takers, and is adjusting to higher rates," Blankfein said.

The U.S. is set to release its advanced estimate for second-quarter GDP next month, which would provide more hints into whether or not the world's largest economy is set to log its first economic downturn since the Great Recession between 2007 and 2009, which was the longest downturn since the Great Depression of the 1930s.

Source: Blackbull Markets

Risk Warnings and Disclaimers

Comments

Add to Favorites

Owen Li

Central Bank

Bank Indonesia will leave its key interest rate steady at 3.50% on Thursday but over one-quarter of economists in a Reuters poll expect a rate rise to stem imported inflation from a weak rupiah currency as the U.S. Federal Reserve tightens aggressively.

Indonesia's central bank is one of a few major Asian central banks that has not raised rates from a pandemic record low since inflation has held within its target range of 2%-4%.

But a 75-basis-point Fed rate rise last week and the prospect of more aggressive moves in the coming months sent the rupiah tumbling by 2%, its worst weekly performance in nearly three years.

Still, 23 of 32 economists in the latest poll taken June 13-20, predicted the central bank will keep its benchmark seven-day reverse repurchase rate at a record low of 3.50% at its June 22-23 meeting.

"Bank Indonesia's policy dashboard is likely to broaden from being focused on domestic growth and inflation, to include financial stability and outflow risks, paving the way for a start to the hiking cycle from July," said Radhika Rao, senior economist at DBS Bank.

Still, a significant minority, 9 of 32, expect BI to join other Asian peers and hike rates by 25 basis points to 3.75%.

"Unless the current pressure on the IDR abates in the lead-up to BI's meeting, the more prudent move is a rate hike, or at least clear signals that a rate lift-off is near," said Krystal Tan, economist at ANZ, who forecasts a 25-basis point rise.

"The absence of a change in stance could risk BI being perceived as the standout regional laggard and intensify pressure on the IDR."

The currency of Southeast Asia's largest economy has fallen nearly 4% this year, half of that last week, raising concerns about imported inflation in a country of over 270 million people.

Until recently, price pressures have been relatively tame. But soaring global energy and food prices have pushed inflation close to the upper band of the BI's target, hitting 3.55% in May, the highest in over four years.

Governor Perry Warjiyo acknowledged at the May policy meeting that inflation will rise above the target band this year but predicted it will cool next year.

"The upward trajectory is likely to remain because of other factors including higher food price inflation and the pass-through from surging input costs and higher minimum wages," noted economists at Nomura, who expect inflation to rise above 4% by the end of Q3.

Poll medians showed BI, which meets monthly, will kick off its rate hiking cycle next quarter, delivering a total of 50 basis points by the end of the third quarter to 4.00%.

Of those who are expecting the first hike in Q3, 7 of 17 economists predicted BI to raise by 25 basis points, 8 predicted 50 basis points while 2 expected 75.

But BI will not be aggressive during this cycle, the poll found. Its key rate was expected to go up a total of 75 basis points to 4.25% by end-year and finish 2023 at 5.00%.