At some point in the future, the monetary policy of the Federal Reserve has been adjusted, and the strong bubble of the US dollar was punctured because the domestic economy was unable to support it. The US dollar may experience a sharp decline. The resulting violent turmoil in the financial market may produce a more serious spillover effect. Of course, by then, the value of gold investment will increase significantly.
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Text/Daily Capital Theory
"Chinese aunt" won't take action?
Another 7-day National Day holiday. Interestingly, the "gold sweep fever" that was hotly discussed on the Internet did not appear, and there were scattered people in front of the sales counters of gold jewelry in various places.
However, since the Mid-Autumn Festival, due to the continuous decline in gold futures, domestic gold stores have significantly increased traffic. Data shows that the recent price of spot gold is around 381 yuan/gram, down about 17% from the highest price of 460 yuan/gram in the first half of the year. The decline in prices directly stimulated the increase in sales, so netizens began to pay attention to whether the "Chinese aunties" would take action again, shocking Wall Street.
So the question is, is it worth "sweeping the street" at this stage?
As of October 2, the price of US futures gold was $1,668 per ounce, down 3.1% in September and 7.5% in the third quarter. Judging from the K-line trend of US futures gold, after hitting a historical second-high of US$2,078.8 on March 11 this year, it showed a unilateral decline in trend.
At present, the US futures gold K-line has reached the lower edge of the high-level platform that began to form in early August 2020 and has broken through the lower edge.
single technically, there are three trends in the future: the first one, breaking through the historical high after adjustment and continuing the bull market of gold. The second type is to continue to oscillate at a high level, using the upper and lower edges of the high-level platform currently formed as the box. The third type is that gold prices fall back to the lower edge of the platform formed from 2011 to 2013, that is, stabilize around US$1,540, and then choose the direction after sufficient adjustment after oscillation.
More radically, the price of gold futures fell to around $1,350, which is the upper edge of the longer platform formed from 2013 to 2019. If you reach this position, the opportunity to invest in gold is far greater than the risk.
From the html February line , the US gold futures price has reached near the 60 month line. Whether you can stand firm will determine which way of walking he chooses. Judging from the annual line chart, it is more likely to continue to fall.
Most people who care about gold investment know that gold trends are closely related to the US dollar. In 1971, in order to protect the US dollar from an international currency crisis due to international currency speculators, the United States chose to decouple the US dollar from gold. makes the US dollar a powerful tool for the United States to harvest the world , so I won’t expand it.
Since gold is denominated in US dollars, when the US dollar depreciates and uses other currencies to buy gold, more gold can be bought, which stimulates demand and increases the demand for gold, which in turn drives gold prices to rise. On the contrary, the appreciation of the US dollar, for consumption of other currencies, is a suppression of consumption and gold prices will fall.
According to the statistical analysis of historical data in the past 30 years, USD and gold maintain an 80% similarity ; in the statistical analysis of historical data in the past decade, the relationship between the USD and gold is close to -1%.
In February this year, "Daily Capital Theory" once published an article saying, " USD Index shows that since April 2015, the USD Index has entered a wide box with an upper edge of about US$100 and a lower edge of about US$89. Can this box be broken? Whether the direction of the breaking will also greatly affect the trend of gold futures."
Now, this box is really broken down, and the US dollar trend is very strong. This is the main driver of gold's decline.
also had an accident. In 2008, the US subprime mortgage crisis triggered the global financial crisis , which also made the risk aversion sentiment of gold and the US dollar pay attention to investors at the same time, and the US dollar and gold unexpectedly rose simultaneously.Investors can easily see from the trend of US gold futures. It started in September 2008 and was not until September 2011 that the unilateral upward market ended.
appeared for the second time in 2020. After entering 2020, the US dollar and gold once again showed a synchronous upward trend. The reason is that the global market is worried about the escalation of the conflict between the United States and Iran , which has led to the fact that most investment institutions have to increase their holdings of gold and US dollar to hedge the potential risks of .
has laid so much groundwork. Let’s compare the reasons for the three possible trends.
The first type, gold rose again and was synchronized with the US dollar index. If this happens, it means that the situation in Ukraine will further deteriorate or escalate to a conflict involving direct participation of multiple countries. This is not impossible, so let’s wait and see.
The second type of sideways oscillation. This also depends on whether the US dollar continues to raise interest rates in and whether the situation in Ukraine is controllable. If these two conditions are not met, the possibility of sideways shock will become smaller.
The third gold futures price continued to fall, even falling to around $1,350. If this situation occurs, the primary condition for is that there cannot be an uncontrollable situation in Ukraine. Under this premise, if the US dollar raises interest rates, then the decline in gold futures prices will become a high probability .
There is no doubt that it is highly likely that the Federal Reserve will continue to raise interest rates.
At the beginning of this year, the global market was still discussing whether the Fed would raise interest rates. However, the answer will be clear soon. On January 26, the Federal Reserve said it could raise interest rates faster and more significantly in the coming months. Some foreign media reported that future interest rate hikes may raise interest rates in March, as widely expected, and reiterated plans to end bond purchases in March and then significantly reduce balance sheets.
to September 21, the Federal Reserve once again raised the target range of federal funds rate by 75 basis points to between 3% and 3.25%. This is the third consecutive rate hike of 75 basis points this year.
This trick is really too cruel. US media reported that this year, the dollar index, the intercontinental exchange, which measures the exchange rate between the United States and major trading currencies, has risen 14%, the strongest year for the dollar since its launch in 1985. The euro, yen and pound sterling all fell to decades lows against the dollar, and emerging market currencies also suffered heavy losses.
data shows that since July, the US dollar index has re-established the 108 mark after nearly 20 years. Since June, the prices of non-ferrous metals such as copper, nickel and zinc have hit their biggest drop since 2008. Last week, except for the possibility of further deterioration in the supply situation of natural gas in Europe, natural gas rose by more than 17%, most commodities including gold, silver, copper, crude oil, etc. fell, with wheat, coking coal, rebar and coke all falling by more than 10%.
chain reaction is that other currencies are depreciating rapidly, causing global capital to quickly return to the United States. Against this background, many countries face the dual pressure of high inflation and a sharp slowdown in economic growth, falling into stagflation, and the scale of debt continues to expand, increasing the risk of severe recession of the global economy .
This forces other countries' central banks to hike interest rates urgently, further suppressing already fragile demand.
There is another even more terrible thing. However, the Fed's radical tightening and the interest rate on U.S. bonds and hit a new high, which has already had an impact on the financial markets and currencies of other countries, and if interest rates continue to be raised, the impact will be greater. This also determines that the US dollar cannot be strong for a long time.
At some point in the future, the Federal Reserve's monetary policy will be adjusted, and the strong US dollar bubble will be punctured due to the lack of support from the domestic economy. US dollar may experience a sharp decline, and the resulting violent turmoil in the financial market may have a more serious spillover effect.
Of course, by then, the value of gold investment will increase greatly. The article is for communication only and is not investment advice. Please pay attention to the investment risk of . It is not easy to code. If you still have power on your phone, please help like and forward it. Thank you very much]
