20210824

<Gold Market Review>Gold is Not Fear of Strong USD and Brewing an Uptrend?

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The U.S. dollar index continued its strong momentum following the August non-agricultural data, and the trend has broken through the mark 93, as shown in Figure 1. At present, it seems that the potential rise is expected to reach 96 U.S. dollars. On the other hand, U.S. exchange may be affected by the epidemic. While facing the Delta variant virus, countries with high vaccination rates have also fallen. The number of new cases in Europe, America and Asia has risen again, which may cause market panic in the future and lead to capital surges entering the dollar to hedge. 

According to the current data, investors are very optimistic about the improvement of the job market. It is expected that the Fed's tightening of monetary policy will accelerate. Gold plummeted by more than 40 U.S. dollars on August 6, and the early trading on August 9 was due to liquidity insufficiency to cause a flash crash and hit a four-month lowest to $1,678. I believe everyone still remembers the bearish view mentioned in the article last month; as expected, a big black candle collapsed directly, giving short-term bearish conditions, and directly breaking down through $1,760. Technically, gold continues to rebound after experiencing a wave of violent sell-offs, and there is no sign to break through the bottom in the short term. 

In figure 2, the gold price chart was formed just right at the bottom of US dollars $1,794 in July after all the resistance above has been verified repeatedly. In addition, now is assumed to be the wave of callbacks after the big drop, seem the strength of this wave of callbacks is way too much. Almost every rising candle is a full-core white candlestick. Therefore, it is better to view the short side more conservatively. 

In summary, it seems that gold is more than just a rebound and callback, it might be an opportunity for another uptrend. But it is necessary to stay above 1,750-1,760 US dollars, otherwise, it will be regarded as a rebound and callback. The top will break through $1,797 and then the next level will be $1,833. However, as the US dollar continues to strengthen, gold will tend to fall back to the range of 1,750-1,760 US dollars and then rise. As the saying goes: "Resting to take a longer road!" I hope that the outbreak after the callback will be stronger. After the $1,833 above is broken, gold may be about to take off!


Hugo Leong Gold Analyst of Hantec Group


 


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