Chapter 9 XAUUSD: Under the Atmosphere of External Interest Rate Hikes, Gold Prices Fell Under Pressure（6.08）
Fundamentals
During the Asian session on Thursday (June 8), spot gold extended fluctuation in a narrow range and is currently trading around 1945. After leaving interest rates unchanged at two meetings overnight, the Bank of Canada announced a renewed 25 bps rate hike to 4.75% in June. The rationale for resuming rate hikes is that excess demand in the economy is persisting longer than expected. There are concerns that the CPI may remain well above the 2% target, with the output growth in the first quarter stronger than expected, combined with higher inflation and a rebound in housing market activity. The market is now pricing in an increase in the probability of a rate hike by the Bank of Canada in July and September, and U.S. Treasury yields are also driven higher. Gold came under pressure as a result, falling as low as the previous day's low again around 1940 above.
Foreign exchange reserves of China were $317.65 million in May, down 0.88% from $3.205 trillion at the end of April. Gold reserves stood at 67.27 million ounces, up 510,000 ounces from the end of April and up 0.76% MoM, up the seventh month.
Key data for investors to watch this session: US jobless claims last week, US wholesale sales MoM, and Q1 GDP of Europe and Japan.
Overall: the RBA and the Bank of Canada have successively resumed interest rate hikes, which the market believes may be paving the way for the Fed to continue to raise interest rates. The Bank of Canada, in particular, has been seen as a leading indicator for the Fed in this rate hike cycle. Short-term gold prices may weaken amid the gradual strengthening of rate-increasing expectations, but rate hiking is destined to be short-term speculation. Especially in the recent plan to issue a large number of US government bonds, rising interest rates will also depress gold prices. However, it is also an appropriate time to open a long position for long-term bulls. Investors need to grasp the rhythm of opening positions, and short-term traders are advised to follow the trend, which is also a good opportunity for rebounding short.
The trading reference range today is 1938-1955.
Technical Analysis
Trading at the daily timeframe, XAUUSD has broken below the 1950-1955 range supported by multiple retracements yesterday, and short-term bullish momentum has weakened. However, XAUUSD has found support above the previous low of 1938, the pattern of which has formed a small double-bottom trend, with the bottom at the 1938 line and the head at the 1985 line.
It is recommended investors buy low and sell high during the day and try long positions lightly after gold prices drop back to the support range of 1938-1940. The stop loss of the gold price is around 1933, and the first target of the take profit needs to focus on 1955, which can be partially exited and set a capital protection order, and the second target is 1966.
Trading Recommendations
Trading Direction: Long
Entry Price: 1935
Target Price: 1965
Stop Loss: 1918
Support: 1938.000/1918.000
Resistance: 1965.000/1985.000
