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Hong Kong-listed Skyworth Group (00751.HK) continued to rise in late trading, up more than 30%.Hong Kong-listed Skyworth Group (00751.HK) rose by more than 14% in late trading.Sources: An EU trade delegation arrived in New Delhi this week for talks.Sources: India is likely to finalize the terms of the protocol for the proposed trade deal with Qatar in October.On September 8th, analyst Giuseppe Dellamotta stated that gold prices jumped to a record high following another weak non-farm payroll report. Market expectations for a dovish Federal Reserve policy have intensified, with three rate cuts currently widely expected this year. Furthermore, the probability of a 50 basis point rate cut in September stands at 8%, but this scenario is only likely to occur if the CPI data released on Thursday shows weakness, at which point gold prices could receive another boost. Golds fundamentals have supported it for months, if not years, and Fed Chairman Powells dovish stance at the recent Jackson Hole symposium served as a catalyst for gold prices to reach new highs. Indeed, real yields have continued to decline steadily, supported by stronger dovish expectations and weak US data. Looking ahead, US CPI data will be released this Thursday, followed by the Fed meeting next week. From a macro perspective, given the Feds dovish response, real yields are expected to continue to decline amidst monetary easing, and gold should maintain its upward trend. However, in the short term, a hawkish repricing in interest rate expectations may continue to trigger a correction.

Gold varies between $1,700 and $1,600 a week before the Fed meeting

Haiden Holmes

Jul 21, 2022 11:12

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Even without Fed officials continually bombarding the airwaves with suggestions of a rate hike, gold's position above $1,700 remains shaky.


In post-settlement trading on Wednesday, gold futures for August delivery on New York's Comex slipped again below $1,700 an ounce, a week before the central bank's announcement on July interest rates, after finishing the official session just above the crucial psychological support.


August was trading at $1,698.15, down $12.55, or 0.7%, at 2:16 PM ET (18:16 GMT).


Following a daily fall of $10.50, or 0.6%, it closed at $1700.20, putting the session close to the $1700 mark.


Despite Fed officials' normal 10-day speech restriction leading the July 27 rate decision, gold bulls have been unable to propel the market significantly higher from last week's 11-month low of $1,695.


With the exception of the dollar's first rebound in over a week, although to levels well below last week's 20-year highs, no major reason contributed to gold's resumption of its drop on Wednesday.


Phillip Streible, precious metals strategist at Blueline Futures in Chicago, observed, "There was consensus that if the dollar rebounds, gold might fall below $1,700, and I believe that's what you're witnessing."


The Dollar Index, which compares the U.S. dollar to six other major currencies, revisited 2002 highs last week as the US Consumer Price Index for the year to June reached four-decade highs of 9.1%. The ensuing dollar increase prompted money market traders to speculate on an unprecedented 100-basis-point Fed rate hike in July. Since then, the current consensus forecasts a 75-basis-point increase in interest rates.


In addition to the absence of Fed comments, U.S. macroeconomic data have been especially poor this week, providing traders more leeway with regard to direction, fund flows, and trading volumes. Although gold bulls had an equal chance of seizing the initiative, their passivity has seemed to constitute a greater proportion of their bravery.

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