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According to the Financial Times, UK financial regulators are conducting an urgent assessment of the risks of Anthropics latest AI model.On April 12th, Maybank senior strategist Fiona Lim stated that while the market may be somewhat disappointed by the lack of progress in US-Iran negotiations, this was not entirely unexpected. The US dollar may gain further upward momentum at the opening on Monday. Some Asian currencies, particularly those of net energy importers such as the South Korean won, Philippine peso, Japanese yen, and Thai baht, began to weaken last Friday and may continue to face pressure this week.On April 12th, Saxo Banks Chief Investment Strategist, Charu Chanana, stated that the failure of the US-Iran negotiations was a setback. For the market, this means the previous easing of tensions is likely to fade. Oil prices may rebound, risk sentiment will be dampened again, and the Strait of Hormuz, even without a complete closure, will remain a real choke point risk. However, this is not surprising given the significant differences in the two sides positions on nuclear safeguards and the Strait of Hormuz issue. For the US dollar, this means some renewed safe-haven support, but unless there is a new military escalation, a broad-based surge is unlikely. Gold may benefit from renewed geopolitical hedging demand, but the market is not yet fully back to the worst-case inflation shock scenario.Kremlin: Russia is prepared to sell natural gas to Europe if there is still a surplus in supply to "alternative markets".Kremlin: Russia currently has only 17% to 18% of Donetsk Oblast in Ukraine out of control.

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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