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On August 21st, KPMG UK Senior Economist Dennis Tartakov stated that UK government borrowing continues to veer off track. Net public sector borrowing in July was £1.8 billion, up from £1.1 billion in the same period last year. Since the start of the fiscal year in April, the gap between forecasts and actual borrowing has remained around £2.3 billion. "Normally, July sees strong personal income tax revenue, but thats not enough to put public sector borrowing levels back on track for the fiscal year," Tartakov said, adding that the Burnham governments promised cost-of-living bailout measures are likely to keep borrowing high in the near term. However, market demand for more debt is limited.On August 21, it was learned that Russian Deputy Foreign Minister Sergei Ryabkov stated in an interview that Russia is open to dialogue with the United States on the Ukraine issue, but will not compromise its principles. Ryabkov pointed out that the US has demonstrated a willingness to engage in constructive dialogue and understand Russias position. However, the more crucial issue at present is whether "Washington can influence the decisions of the Kyiv regime and its European backers, who are still fantasizing about inflicting a strategic defeat on Russia." Ryabkov stated that US Secretary of State Marco Rubio has indicated the need for new solutions, and Russia is willing to listen to these proposals. He emphasized that Russia is open to dialogue with the US, but this does not mean that Russia will abandon its principles.On August 21, it was reported that the Japanese government will allocate an additional 150 billion yen (approximately US$944 million) to support chip startup Rapidus, increasing spending in an effort to compete with companies like TSMC. According to a source familiar with the matter, Japans Ministry of Economy, Trade and Industry will seek more funding for the domestic chip foundry in the 2027 fiscal year budget. This government-backed joint venture, established in 2022, aims to manufacture cutting-edge 2-nanometer chips by 2027 and help Japan reduce its dependence on TSMC. Policymakers consider Rapiduss success and its technological independence in AI, robotics, and quantum computing crucial to national security.Bernstein raised its price target for NetEase (NTES.O) from $150 to $160.Southbound capital saw a significant net outflow of HK$7.63 billion today. In the Shanghai-Hong Kong Stock Connect, Alibaba-W and Xiaomi Group-W experienced net outflows of HK$1.118 billion and HK$590 million respectively; Pop Mart saw the largest net inflow at HK$209 million. In the Shenzhen-Hong Kong Stock Connect, Tencent Holdings and Meituan-W saw net outflows of HK$570 million and HK$341 million respectively; both saw the largest net inflow at HK$496 million.

June Gold Buyers May Face Difficulties at $1987.60

Larissa Barlow

Apr 14, 2022 10:14

The market's strength is being fueled by demand for a hedge against rising inflation during the Russia-Ukraine conflict, lessening pressure from expectations of an aggressive US interest rate hike, and the US Dollar's intraday reversal top.

 

June Comex gold futures are currently trading at $1982.70, up $6.60 or 0.33 percent from their previous close. The SPDR Gold Shares ETF (GLD) is currently trading at $184.66, up $0.89 or 0.48 percent from its previous close.

 

Gold is regarded as an inflation hedge and a hedge against geopolitical concerns. However, higher interest rates in the United States would increase the opportunity cost of storing non-yielding bullion and strengthen the dollar against which it is valued.

 

However, the price action shows that gold buyers are seeking insurance against inflation and are not very concerned about opportunity costs at the moment. Despite all of the Fed's hawkish rhetoric and anticipation for aggressive rate hikes, we have yet to witness a shift in the direction of inflation.

 

Gold is likely to remain underpinned for the foreseeable future as long as the inflation arrow continues to point upward and the Ukraine war continues.

 

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Technical Analysis of the Daily Swing Chart

According to the daily swing chart, the primary trend is upward. A move over the intraday high of $1985.50 reaffirms the uptrend. A break of $1916.20 will revert the major trend to the downside.

 

On the upside, the retracement zone between $1987.60 and $2009.90 is the nearest objective.

 

On the downside, the long-term Fibonacci level at $1958.70 serves as the initial support, followed by the short-term 50% level at $1932.90.

Technical Forecast for the Daily Swing Chart

The June Comex gold futures market's path through Wednesday's close is likely to be dictated by trader reaction to the 50% level at $1987.60.

Scenario of Bullishness

A sustained move above $1987.60 will signal that buyers are present. This could provide the necessary momentum for a test of the Fibonacci level at $2009.90. This is a trigger point for an upside acceleration.

Scenario of the Bear

A persistent decline below $1987.60 indicates the existence of sellers. They intend to attempt the formation of a secondary lower top. This, if successful, might result in a break into $1958.70.

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