Gold market analysis: the U.S. consumer confidence index burst, and the high level of gold retreated slightly

On Thursday (April 14), the high international gold price was under pressure, ending the continuous upward momentum in the past six trading days, and spot gold fell slightly by 0.15% to US $1974.77 / ounce.

On Thursday, the United States released a series of economic data. Retail sales in the United States rose by 0.5% in March, with an increase of 0.8% in February and an expected increase of 0.6%.

Data released by the Ministry of labor on Thursday showed that as of April 9, the number of initial jobless claims jumped to 185000, exceeding the estimated 171000, which was more than market expectations, but the overall level was still at the lowest level in half a century. Despite the pressure of high inflation, the University of Michigan consumer confidence index rose to a three-month high, which surprised market participants.

The index rose to 65.7 from 59.4 in March, higher than the forecast of 59. Consumers predict that the inflation rate will rise to 5.4% next year, while the inflation rate is expected to drop to 3% in the next 5-10 years.

Fed officials have opened the door to raising interest rates by 50 basis points at the May meeting, and the Fed's stimulus plan for raising interest rates shows that the possibility of raising the federal funds rate by 50 basis points is 94%.

The US producer price index (PPI) released on Wednesday once again confirmed this bet. The index shows that the potential high production costs may bring upward pressure to the already high inflation.

In addition, fed governor Waller said that the data supported a 50 basis point rise in interest rates. He was inclined to raise interest rates sharply at the May meeting, and may raise interest rates further significantly in June and July.

He expressed the hope that the interest rate level would reach above neutral in the second half of this year. However, as the dollar fell further from its highest level since May 2020,

The downward trend of gold is still buffered, as it often benefits dollar denominated commodities. In addition, geopolitics may further promote the flow of safe haven funds to gold,

The latest progress in the conflict between Russia and Ukraine shows that the time to achieve peace is far longer than expected. The Russian Deputy foreign minister said on Wednesday that they would regard American and NATO vehicles transporting weapons on Ukrainian territory as legitimate military targets.

 

 

Earlier, Putin said in his speech on Tuesday that the peace talks with Ukraine had reached an impasse. These geopolitical headlines shattered the hope of ending the war in Ukraine through diplomatic means.

In addition, concerns about the potential economic impact of the Ukrainian crisis, as well as concerns about inflation, should continue to enhance the attractiveness of gold as a hedge against rising prices.

The fundamental background seems to be clearly biased towards long traders, but the lack of follow-up buying makes them cautious before preparing for further gains.

Technically, gold prices are trying to rise. However, given Fed officials' continued concerns about US inflation, a strong dollar may prevail as they make further tough statements. Therefore, there are still obstacles on the way forward for gold. If the resistance level above can break through 1980, the goal will be $2000 / ounce.

On the contrary, if we try 1980 for many times, we should be careful to prevent the risk of profit adjustment, and the line below $1930 may be under pressure again. If this level falls, the prospect of rising in the near future will be seriously weakened.