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On July 28, the Monetary Authority of Singapore (MAS) warned that the uncertainty surrounding continued massive investments in artificial intelligence (AI) is a key risk to global growth and financial markets, while also citing the threat of a prolonged escalation of conflict in the Middle East. MAS Managing Director, Cheah Chan, stated that the surge in investment in data centers, chips, computing infrastructure, and semiconductor capacity has driven global economic growth, which has remained resilient despite shocks ranging from high tariffs to war. Cheah pointed out that whether the AI boom continues or funding is significantly reduced, it will have a major impact. A sharp correction could severely weaken global economic growth. He added that financial stability risks could also stem from the exposure of equity, credit, and lending markets to unsustainable business models that lead to deteriorating cash flow and weak credit conditions within complex financing structures. Conversely, a prolonged AI boom will impact income, demand, and inflation. Global growth, investment, and financial market performance are already highly dependent on forecasts of continued large-scale increases in data center and semiconductor chip investment over the long term. This is particularly evident in US capital markets and Asian economies that export semiconductors.On July 28, Meta Platforms (META.O) and BlackRock announced a joint investment in and ownership of a data center campus in El Paso, Texas. The campus, currently under construction, will have 1 gigawatt of computing power. Meta will provide construction management, administration, and property management services and will be the first and sole user upon completion. The transaction is expected to close in the coming days, with the project scheduled to begin operations in 2028. The El Paso data center is a project representing over $10 billion in investment for Meta and will support over 4,000 construction jobs and 300 operations jobs at peak times. Currently, over 2,300 workers are on site. A fund managed by BlackRock will hold an 80% stake in the joint venture, while Meta will retain the remaining 20%. Both companies have committed to jointly contributing approximately $14 billion in development costs for the campuss buildings and long-term power, cooling, and communications infrastructure.BlackRock: Meta will provide a total of $13 billion in residual value guarantees.BlackRock: Meta will receive a one-time allocation of approximately $1 billion.BlackRock: Meta will lease the entire campus for an initial term of four years, with four renewal options.

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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