Home » Market worries about the Fed’s shrinking balance sheet suggest that gold rebounded to $20 after hitting a new low of nearly four weeks. FX678

Market worries about the Fed’s shrinking balance sheet suggest that gold rebounded to $20 after hitting a new low of nearly four weeks. FX678

by admin

Market worries about the Fed’s reduction in its balance sheet suggest that gold rebounded by $20 after hitting a new low of nearly four weeks

On Monday (June 14) COMEX August gold futures closed down 0.7% at US$1,865.90 per ounce, a record low in the most recent month; before the Fed meeting this week, U.S. Treasury bonds lost momentum and the market predicted that the Fed meeting might Provide clues for future monetary policy.

Phillip Streble, chief market strategist at Blue Line Futures, said investors may have taken some gold positions before the Fed’s policy meeting that began on Tuesday. The Fed may hint that they will begin to shrink, which should put pressure on gold. He added that the Fed is already “withdrawing” liquidity from the system, which should also put pressure on gold. He was referring to the surge in the size of the Fed’s reverse repurchase operations last week.

Market participants will also take a closer look at the Federal Reserve’s changing outlook for unemployment, inflation and economic growth, as well as the likely date of the first rate hike.

TD Securities analysts pointed out in a report: “We believe that in the case of capital flows that are not particularly supportive, the Fed’s reduction discussions have weakened people’s interest in gold, so we believe that gold prices are at risk of further weakening.

Data from the United States on Friday showed that speculators reduced their net long gold positions on the New York Mercantile Exchange (COMEX) in the week ending June 8.

See also  Consumption, wealthy families spend five times more than those who are not

In late trading in New York City, spot gold rebounded to around US$1866, rising by more than US$20 from the daily low. Independent analyst Ross Norman believes that the key to the Fed’s interest rate decision this week is the extent to which the Fed will pay attention to the immediate issues, that is, inflation and the reduction of bond purchases. The price of gold rebounded strongly after falling below US$1,850 per ounce, indicating that the bears agreed that this support level would at least support the gold price before the Fed’s decision, and they have profited to close their positions.

Commerzbank expects that inflation concerns will push the price of gold to $2,000 per ounce before the end of the year, and that inflation may remain at a very high level before the third quarter, pushing the Fed to reduce its bond purchase program around the fourth quarter.

Disclaimer: Fusion MediaI hereby remind you that the data contained in this website may not be real-time and accurate. All CFDs (such as stocks, indices, futures), cryptocurrency and foreign exchange prices are provided by market makers rather than exchanges, so prices may not be accurate and may differ from actual market prices. That is to say, these prices are only indicative prices and should not be used for trading purposes. Therefore, for any transaction losses that may result from the use of such data,Fusion MediaWe do not assume any responsibility.

Fusion MediaOr anything withFusion MediaThe person concerned does not accept any liability for loss or damage caused by relying on the data, quotations, charts and buy/sell signals contained in this website. Please fully understand the risks and costs associated with financial market transactions. This is one of the most risky forms of investment. The English version of this agreement is the main version. If there is a discrepancy between the English version and the Chinese version, the English version shall prevail.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy