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On April 3, Kimberly Clausing, a former Biden administration official and nonresident senior fellow at the Peterson Institute for International Economics, called Trumps tariff announcement on Wednesday "very stubborn and much worse than I expected." "I expected things to be bad, but I didnt expect this level of self-harm. Its shocking that anyone thought this was a good idea. Id be shocked if we can get through this without a recession and Trump doesnt have to reverse his policies."On April 3, some economists worry that if Trump does not quickly cancel the latest round of tariffs, it may push the US economy into a recession. "If the US government implements these higher tariffs without major exemptions, it will be difficult for the economy to digest this. A recession seems more likely." said Mark Zandi, chief economist at Moodys Analytics. Zandi said, "In many ways, the tariffs announced by Trump are even worse than the worst case scenario he envisioned. If they stick to it, I will buckle up and prepare for the impact." Zandi added that on a static basis, tariffs account for nearly 2% of GDP (not considering the impact of tariffs on the economy and taxes), which makes this round of tariffs the largest tax increase since the tax increase used to finance the war during World War II.German Automobile Industry Association VDA: The EU must now speed up and make up its mind on the issue of free trade agreement.On April 3, the Reserve Bank of Australias latest report for the banking industry warned that continued uncertainty in US trade policy "could have a chilling effect on business investment and household spending decisions, and pose a significant headwind to the outlook for global economic activity and inflation." The Reserve Bank of Australia said there was also considerable uncertainty about the impact of possible changes in fiscal, regulatory and other government policies on global growth and inflation.The Hang Seng Index in Hong Kong opened on April 3 (Thursday) down 564.32 points, or 2.43%, to 22,638.21 points; the Hang Seng Technology Index opened on April 3 (Thursday) down 168.53 points, or 3.11%, to 5,257.91 points; the CSI 300 Index opened on April 3 (Thursday) down 219.05 points, or 2.57%, to 8,312.46 points; the H-share Index opened on April 3 (Thursday) down 61.24 points, or 1.59%, to 3,800.76 points.

Gold price reaches a new YTD low as bears watch for a sustained breach below $1,700

Alina Haynes

Jul 15, 2022 11:41

 截屏2022-06-07 下午5.15.00.png

 

The gold price struggled to build on the day before's moderately successful advance higher from the $1,707 region and experienced fresh selling pressure on Thursday. The XAUUSD fell during the early North American session and reached its lowest point since August 2021 as a result of the intraday decline. Bears are still looking for a sustained breach below the $1,700 threshold.

 

The likelihood of a more aggressive Federal Reserve policy tightening caused the US dollar to resume its unrelenting ascent, reaching a new two-decade high. The dollar-denominated gold was under severe downward pressure as a result of the higher USD, which was considered to be a crucial cause. The headline US CPI increased to 9.1 percent in June, the highest level since November 1981, according to the US Labor Department. The information made a strong argument for yet another massive Fed rate rise and further supported the dollar.

 

After Atlanta Fed President Raphael Bostic indicated on Wednesday that everything is on the table to stop the ongoing rise in inflationary pressures, the rates on US Treasury bonds increased. The benchmark 10-year US government bond yield was quickly pushed back around the 3.0 percent level as the markets began pricing in the potential of an unprecedented 100 basis point rate rise later this month. Increased US Treasury bond yields also had a role in reducing demand for gold's lack of income.

 

The US Producer Price Index (PPI) report on Thursday, which significantly outperformed forecasts, confirmed hawkish Fed views. According to data released by the US Bureau of Labor Statistics, the gauge for final demand items increased to 11.3 percent on an annual basis in June, defying consensus predictions that it would have slightly decreased to 10.7 percent from 10.9 percent in May. An increase in US Weekly Initial Jobless Claims to their highest level since November 2021 was somewhat countered by this, to a greater extent.

 

For the time being, the price of gold has been able to maintain itself above the $1,700 level, which is considered as a support level and, if broken strongly, as a new trigger for bearish traders. The XAUUSD might then continue to decline and test the low point from September 2021, which is in the $1,787–$1,786 range. The negative trend might continue all the way to the 2021 annual low, which is about $1,677–1,676.

 

On the other hand, the overnight swing high, located around $1,745 currently appears to operate as a powerful immediate barrier in front of the supply zone between $1,749 and $1,752. A rise towards the $1,767–$1,770 strong horizontal support breakpoint might be initiated by further strength above, at which time bulls may try to retake the $1,800 round-figure level.


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