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On September 11, a former senior official of the Bank of Japan warned that U.S. Treasury Secretary Bessants "unusual" intervention in Japanese monetary affairs could damage the Bank of Japans credibility and trigger greater volatility in global markets. This comes as markets anticipate a 25-basis-point rate hike by the Bank of Japan at its meeting next week, a faster pace than previously anticipated. Bessant has intensified his verbal pressure in recent weeks, challenging global traders to bet against him and claiming inside information about the Bank of Japans intentions. While senior Japanese government officials and the Bank of Japan have largely refrained from publicly responding to Bessants remarks, Finance Minister Satsuki Katayama stated that the U.S. Treasury Secretarys "Im the house" warning to bond traders sounded "a bit scary" when translated into Japanese. Takahide Kiuchi, executive economist at Nomura Research Institute and a former senior official at the Bank of Japan, said, "Bessants intervention in Japanese monetary policy is unusual and could damage the Bank of Japans independence." Another former central bank official stated that if the Bank of Japan is perceived as setting interest rates under external influence, markets will be more skeptical of its future statements and decisions, thus eroding its credibility.European major stock index futures rose slightly, with the Euro Stoxx 50 futures up 0.24%, the German DAX futures up 0.15%, and the UK FTSE futures up 0.22%.The UKs seasonally adjusted trade deficit with the EU in July was -£11.302 billion, compared to -£12.559 billion in the previous month.The UKs seasonally adjusted trade balance for July was -£3.45 billion, compared to a forecast of -£4.995 billion and a previous reading of -£5.537 billion.The UKs seasonally adjusted non-EU trade balance for July was -£9.663 billion, revised from -£10.448 billion in the previous month.

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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