Since the Fed is entering the cycle of raising interest rates, voices in the United States have also questioned whether raising interest rates can really effectively relieve price pressures. Even within the Federal Reserve, policy differences on controlling inflation at 2% next year are increasing, and they are divided into two parties, the doves and the hawks. Naturally, the supporters have the reasons, but the opponents are not completely unreasonable. For example, opponents in the United States believe that continued interest rate hikes may lead to consumption suppression and tight liquidity in financial markets.

As for the continued high inflation in the United States, the Federal Reserve adopted a very aggressive policy of raising interest rates to cope with inflation. Though the inflation rate in the United States is still at a high level. However, there has been a slowdown recently. The Consumer Price Index (CPI), which is an important reference indicator for the Federal Reserve's monetary policy, has attracted widespread attention from the market. On the local time of December 13, the United States announced the latest consumer price index (CPI) for this year, showing that the month-on-year increase in November was 7.1%, which is the lowest since January this year. Personally, I think this is the strongest signal of slowing inflation in the United States so far. On the day when the information was released, gold responded enthusiastically, taking advantage of the trend to rise by more than 40 US dollars. At present, it seems that the Fed's interest rate hike policy has initially achieved results.  

Based on past experience, whenever inflation reaches its peak, the economy usually begins to recover. The slowdown in interest rate hikes means that the US dollar index will fall, which increases the attractiveness of overseas investors on gold. Therefore, the current gold has once got a chance to rise.  

The previous article mentioned that the view of gold has turned to bulls. As of December 22, the 1,800 mark has been reached. At present, the bullish trend is still maintained, but it is mainly based on the callback and then looking at the bulls. Technically, it has been working hard since the beginning of November. As shown in the picture: If the first level of 1,800 can stand firmly, the price of gold may aim at USD 1,870. Even if it fails to stand firmly, it will fall back to the supporting area of 1,728 with a high probability. It is also supported by the golden ratio of 0.618. Investors who missed out earlier can wait patiently. The first target is still USD 1,800, and the second target is USD 1,870. On the downside, if the gold price hits USD 1,800 and then falls back, sellers may re-enter the market which has a chance to fall below USD 1,728.  

For now, bulls are still relatively dominant in gold, and we only need to pay attention to the need for short-term repeated adjustments. We continue to pay attention to the support of USD 1,728 - 1,730 below.

Hugo Leong

Gold Analyst of Hantec Group