The Fed's semi-annual monetary report emphasizes uncertainty; margin requirements are back! Gold is consolidating at high levels and poised to break out.
International spot gold fluctuated at a high level on Friday (June 12), reaching a high of $1742.80 per ounce in the US market. The rebound in the stock market and the stabilization of market sentiment led to a moderate decline in safe-haven buying of gold. However, due to the considerable uncertainty surrounding the economic outlook and the persistent risk of a second wave of the epidemic, the support for gold prices remains firm. However, following the release of the Federal Reserve's semi-annual monetary policy report, gold fell more than $8 in 20 minutes.
Time:
2020-06-13 09:08
International spot gold fluctuated at a high level on Friday (June 12), reaching a high of $1742.80 per ounce in the US market. The rebound in the stock market and the stabilization of market sentiment led to a moderate decline in safe-haven buying of gold. However, due to the considerable uncertainty surrounding the economic outlook and the persistent risk of a second wave of the epidemic, the support for gold prices remains firm. However, following the release of the Federal Reserve's semi-annual monetary policy report, gold fell more than $8 in 20 minutes.
The Federal Reserve also stated that the future economy is full of uncertainty, and the future progress of the epidemic is also highly uncertain. A resurgence of the epidemic is a major risk. In addition, the collapse of demand could ultimately lead to the bankruptcy of many businesses.
In addition to concerns that the economic recovery may be slower than expected, the progress of the epidemic in the United States is also not optimistic. On the 11th local time, Nashville officials announced that they plan to postpone the next phase of the city's reopening plan after an increase in confirmed cases of COVID-19. In addition, the average daily increase in confirmed cases and hospitalizations of COVID-19 in Texas has continued to rise in recent days. An official from the state's health department said that the situation remains severe. The corresponding risks continue to provide solid support for gold.
In terms of economic data, the University of Michigan's consumer sentiment index for June was 78.9, higher than the expected 75 and the previous value of 72.3. However, US National Economic Council Director Kudlow said in his latest remarks that the United States will not shut down the economy again because of the coronavirus, and the United States has not seen a second wave of the COVID-19 epidemic. Almost all small businesses will reopen next month.
Although the remarks denied a second wave of the epidemic in the United States, they did not completely alleviate market concerns. At the same time, the statement that the United States will not shut down the economy again due to the epidemic also fueled investor hedging. This statement clearly did nothing to help the market's hesitant direction, but instead deepened investors' contradictory psychology.
Technically, the daily chart shows that gold is rising. The high point on June 1st. Breaking above this level will attract more momentum and buying interest for a further advance towards the more than 7-year high of $1764.80.
Future Outlook:
UBS analyst Joni Teves pointed out that gold is still well supported by loose monetary policy, but further stimulus is needed for a recent breakthrough. He believes that investors will remain cautious and wait and see when considering whether to increase long positions.
Carlo Alberto De Casa, chief analyst at trading platform ActivTrades, said: "Just as at the beginning of the March crisis, yesterday's stock market crash did not trigger an immediate rise in gold. This violent correction means that investors need to quickly exchange cash for margin calls, and they must also liquidate their gold profits to offset other less fortunate trades. The main trend continues to support gold, allowing it to regain strength today, and the environment is favorable for another rise in gold."
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Although gold prices rose this week, market volatility has clearly increased. While the US-UK agreement is symbolic, its content is limited and insufficient to alleviate concerns about a global economic slowdown. Therefore, gold prices will continue to fluctuate between safe havens and policy signals, closely monitoring the Federal Reserve's interest rate expectations and global trade sentiment.