Gold market analysis: The minutes of the Fed meeting are still “hawkish”, gold fell slightly
Gold prices fell on Wednesday (May 25), ending a five-session winning streak. The U.S. dollar rebounded after minutes of the Federal Reserve’s May meeting showed that most participants believed a 0.5 percentage point rate hike in June and July might be appropriate. In late U.S. trading, spot gold closed at $1,853.09 an ounce, down $13.18 or 0.71%, reaching a high of $1,867.96 an ounce within the day and a low of $1,841.97 an ounce.
Minutes of the Fed’s May 3-4 meeting released on Wednesday showed that “most participants believe that a 50 basis point rate hike may be appropriate at each of the next two meetings. Many participants predicted an accelerated withdrawal of support. A change in monetary policy will put the Committee in a good position later this year to better assess the impact of policy tightening and the extent to which economic developments can support policy adjustments.” “Participants agreed that the uncertain economic outlook With high volatility, decision-making should be data-driven and focused on bringing inflation back to the Committee’s 2% target while maintaining a strong labor market environment. For now, participants determined that a quick shift to a more neutral monetary policy stance is key. They also noted that a restrictive policy stance could become appropriate given the changing economic outlook and risks to the outlook.” Fed researchers raised their inflation forecasts, the minutes showed. They estimated the personal consumption expenditures price index (PCE) to rise by 4.3% in 2022, and lowered their forecasts for 2023 and 2024 to 2.5% and 2.1%, respectively. The minutes of the Fed meeting continue to show a hawkish stance, which may continue to be detrimental to gold for a certain period of time. Moreover, the June interest rate meeting will also be on the stage soon. It is expected that before that, the gold bulls should be more afraid.
Yesterday, the gold market opened at 1865.6 in the early trading, and the market price was slightly lower; after pulling up to give the position of 1868, the market began to fall back. The daily line was at the lowest level of 1841.5, and then the market rose in late trading, and the daily line finally closed at 1853.1. After the position, the market closes with a long shadow line, and after this pattern ends, the daily line enters a consolidation period, and this wave of rebound seems to have a knot pattern. At the point, pay special attention to 1850 and 1841 support, if it falls below, it will fall back to the 1830-1820 area. Only after breaking through the $1865 level, we may see signs of further upside.
Personal views only, do not represent the views of the organization
Bank of China Guangdong Branch Wang Gang
Source: Bank of China official website