Weierxin Daily Comment·׀U.S. dollar fell sharply, gold price rebounded and heavy
Pay attention to the impact of inflation data today
September 13, 2022 Weierxin Investment Consulting Research Center
Chief Analyst Yang Yijun
On Monday, the international spot gold price opened at US$1717.06, with a high of US$1735.09, a low of US$1711.60, closing at US$1724.27, up US$7.83, an increase of 0.46%. The daily K-line fluctuated and rebounded small positive line.
On Monday, the US dollar index opened at 108.99 points, with a high of 109.99 points and a low of 107.8 points, closing at 108.30 points, down 700 points, a drop of 0.64%. The daily K-line fluctuated downward mid-yin line.
On Monday, the Asian market was before 14:00 Beijing time, gold prices and US dollar fluctuated narrowly. Gold prices show weakness in the process of narrow softening compared with the US dollar index. The following hour and a half, the US dollar index fell sharply by 1,000 points, corresponding to the rise of gold prices from around US$1,712 to an ultra-short-term pattern high near US$1,726. The gold price seems to correspond to the US dollar market performance, but in fact, the gold price has weakened relative to the US dollar index guidance.
First of all, we analyzed in the daily review last Tuesday that even if we observe daily technology, we should pay attention to the short-term US dollar index pattern peak after the top divergence. The following figure is the infographic of the daily comment tips last Tuesday:
We remind investors to pay attention to the possibility of a "top divergence" in the "overbought zone" in the past two weeks. We should pay attention to the short-term technical risks of continuing to be long on the US dollar, and pay attention to the short-term short-term short-term or selling gold and silver.
The US dollar index peaked last Wednesday after trying 110.79, and confirmed the top divergence pattern on the daily KD indicator. In the past four trading days, the US dollar index fell sharply by more than 3,000 points, an amplitude of about 3%. However, the pace of rebounding gold prices generally seems to be heavy. For example, the latest daily K-line comparison chart of the US dollar and gold prices:
US dollar index fell significantly for four consecutive days, but the corresponding gold price seems to have not yet been confirmed to leave the short-term bottom. If the gold price corresponds to the fluctuation of the US dollar index in the stage, the gold price should have tried to show the corresponding high point of the L-line, that is, around US$1,765. On Monday, the actual price of gold was only at the highest level to $1,735, which was significantly behind the guidance of a sharp pullback in the US dollar, demonstrating the heavy haze of the current long market. The market seems to be afraid of the Federal Reserve continuing to raise interest rates on September 21.
But the performance of gold prices on Monday was not "useless". During the European and American markets from 16:30 Beijing time to 0:00 overnight, the US dollar stopped falling dynamically and rebounded volatility, while the corresponding gold price was against the strong US dollar market and continued to rise, fluctuating from US$1,726 to US$1,735. However, all this increase was given back, resulting in a clear online appearance of gold prices on Monday, and the short-term market prospects were like Kanyu.
Today's US inflation index (Consumer Price Index CPI) is about to be released, and it is expected to have a significant impact on the US dollar and gold prices. In theory, if the inflation index is tenacious or stronger than expected, it may strengthen the market's affirmation that the US dollar will continue to raise interest rates by 75 points on the 21st of this month. Judging from the relationship between gold prices, inflation and the US dollar in the recent months, inflation data is stronger than expected, which will boost the US dollar and suppress gold prices. Inflation data is weaker than expected, or prices may fall faster than expected, which will impact the US dollar and boost gold prices.
According to CME's "Feder Observation": the probability of the Fed raising interest rates by 50 basis points in September is 10%, and the probability of 75 basis points is 90%; the probability of a cumulative interest rate hike by November is 8.7%, the probability of a cumulative interest rate hike by 100 basis points is 80%, and the probability of a cumulative interest rate hike by 125 basis points is 11.3%. According to the logic of gold price fluctuations in the stage, the interest rate expectation puts pressure on the gold market and impacts the market's confidence in going long for gold.
Although tonight's data shows that US inflation continues to fall, do you think the trend of US inflation is confirmed? Obviously not, the current US Treasury Secretary doesn't think so. On September 11, Treasury Secretary Yellen said U.S. gasoline prices may rise again later this year. “This risk exists and we are working to set a price cap to try to address this risk,” she said."
The long-term logic between gold and inflation has not been reflected in recent months. In the long run, the logical relationship between gold prices and US dollar interest rates has not always been shown in recent months.
The author believes that the biggest highlight of the precious metal market on Monday is the strength of silver, palladium and platinum, all of which have been rising for a long time. Especially the strong upward trend of silver prices, it is confirming the signal of bottoming out in the medium term of silver prices. For example, the monthly K-line chart of silver price:
From 2015 to the present, the monthly silver price line has shown a "oversold" state similar to the August closing, with only three times. The first two times were the mid-term bottoming signal of silver price. After the sharp rebound of silver price on Monday, the dynamic monthly K-line K-D indicator of silver price has already shown a turning point in the oversold zone. If the inflection point signal is confirmed at the close of September, it may mean the confirmation of the mid-term bottoming signal of silver price. The average price resonance glued support in June and December (five-year lines, ten-year lines) is not easy to be effectively broken down.
Another example is the latest dynamic weekly K-line observation of silver price:
After the silver price rose sharply on Monday, the bottom divergence signal of the silver price weekly KD indicator stage is confirmed. Of course, this requires the weekly closing of the silver price to be frozen like this! The technical support of the
250-week moving average for silver price is also not easy to effectively break in one go. Looking at the 120-week moving average, after the silver price fell to US$21.40 in October 2021, it will form a technical support for the silver price for up to 7 months. Therefore, if the silver price is near the 250-week moving average with stronger theoretical support. I don't feel surprised that the effect is bottoming out.
Of course, further matching other signals judgments will be better. The content of the comments on Friday is worth further digestion by investors. In this internal report, there is another dry information different from previous analysis. I hope that the gold and silver beetles will join hands with the Willxin Information colleagues, and the general public's judgment of market risks and opportunities is often wrong due to brainstorming deliberately created by the main force.
