On Tuesday (June 14), the international gold price rebounded and turned up after refreshing its low since May 18 to $1809.16 / ounce. The suspension of the upward pace of the dollar eased the selling pressure on the gold market. However, due to the increasing market bets on the Federal Reserve to actively tighten monetary policy, the rise of gold prices has been limited. It is almost certain that the hawkish stance of the Federal Reserve will only be stronger than that in March.
At 15:01 Beijing time, spot gold rose 0.56% to $1829.69 per ounce; COMEX gold futures contract fell 0.02% to $1831.6 / ounce; The dollar index fell 0.23% to 104.972.
The US dollar index recorded a new high of 105.29 since mid December 2002 overnight, causing gold denominated in US dollars to plummet by nearly 3%, although gold is expected to continue to maintain its position as an inflation hedging tool.
US dollar sentiment was supported by the US Federal Reserve's bet that it could raise interest rates by 75 basis points this week. The rise in interest rates will lead to increased concerns that the U.S. economy will fall into recession, which also led to a sharp decline in global stock markets. Before the Federal Reserve announced its interest rate decision on Wednesday (June 15), gold, a non yield asset, is unlikely to attract a large number of buyers.
On Wednesday, Fed officials will elaborate on how to cool the economy without plunging the economy into chaos in the coming months. However, it is increasingly difficult to achieve this goal, and the U.S. economy is plagued by sustained high inflation and weak growth prospects.
It is almost certain that the hawkish stance of the Federal Reserve will only be stronger than that in March. The meeting was held two weeks after Federal Reserve Chairman Powell and U.S. President Biden met in the White House. At that time, the White House was increasingly worried that the soaring costs of everything from rent and food to gasoline and air tickets diluted the positive effect of the attractive employment prospects (the unemployment rate is currently 3.6%).
Julia Coronado, a former Federal Reserve economist and President of macro policy perspectives, said: "in terms of information transmission, this will be a difficult meeting. The prospect is not optimistic, and they have no choice that is easy to make."
Strategists at TD Securities said that the technical collapse may be the catalyst for the sharp decline in gold prices. The widening valuation gap between gold and real interest rates has exacerbated the market's revaluation of gold prices. "The trend is still downward... We estimate that falling below $1810 will trigger a large-scale sell-off by systematic trend trackers."