Overnight, spot gold fluctuated and ended lower, with a daily high of $1,798.60 and a low of $1,783.63, and finally closed at $1,787.56. Gold rose slightly during the European market today and is currently hovering around $1,800.
As gold fell, US stocks also recorded four consecutive negative days.
Recession concerns intensified
Overnight, Federal Reserve Chairman Powell's hawkish speech last week was still affecting the market, investors continued to weigh the prospects of interest rate hikes , while the market's concerns about an economic recession intensified .
All three major U.S. indexes opened higher and then moved lower. At midday, they were at daily lows. The Dow rose nearly 120 points at the beginning and then fell nearly 340 points. The Nasdaq fell as much as 1.9% during the session. As of the close, the Dow Jones Index fell 0.49%, closing down 162.92 points, at 32757.54 points; the S&P 500 Index fell 0.90%, at 3817.66 points; the Nasdaq Index fell 1.49%, at 10546.03 points.
Wall Street well-known short seller, Morgan Stanley chief strategist published a research report again on December 19th, Eastern Time, issued an early warning about corporate earnings decline. He said: "Interest ratesand inflation may have peaked, but we are seeing warning signs from corporate earnings. We believe this reality is still underestimated, but we can no longer turn a blind eye to it."
In addition, he predicts that the U.S. stock market will usher in the worst year since the global financial crisis, and at the same time, corporate earnings will also suffer the same fate. Moreover, the coming corporate earnings recession "may itself be similar to the situation in 2008/2009," which may trigger another new low in the stock market, "even much worse than most investors expected."
In addition, during today's Asian trading session, a black swan came, and global stock markets suddenly encountered a sell-off.
black swan burst!
During today’s Asian trading session, global stock markets suddenly encountered a wave of selling. Among them, China's Shanghai and Shenzhen 300 Index once fell by 2%; Hong Kong's Hang Seng Index once fell by 2%, and the Hang Seng Technology Index once fell by 4%; the Nikkei Index closed down 2.5%; Japan's 10-year government bond futures fell 200 ticks to a 6-month low, and suspended trading due to the circuit breaker mechanism .
The reason is that the Bank of Japan issued a policy statement on Tuesday saying that it will allow Japan's 10-year government bond yield to rise to about 0.5%, which is higher than the previous upper limit of the fluctuation range of 0.25%. The Bank of Japan said the move would enhance the sustainability of its monetary easing policy. Giving up the 0.25% target also means that the Bank of Japan is really unable to withstand the pressure of continuing to buy government bonds.
The Bank of Japan once again told us that complacency is the devil. This can be said to be the biggest surprise they have brought to the market since they switched to negative interest rates in January 2016.
This unexpected decision shocked the global financial market, triggering a sharp rise in the yen, a sharp fall in Japanese stocks, a jump in U.S. and Japanese Treasury bond yields, and a shock to cross-market assets.
Interestingly, the yen strengthened against the dollar despite the "accommodative" implications of increased JGB buying, as the 10-year yield has a wider/higher range, in theory the BOJ will have to buy fewer bonds to keep it within its limits.
Why does the Bank of Japan’s adjustment of the upper limit of the fluctuation range of government bond yields cause such huge fluctuations in the market?
Analysts believe that the Bank of Japan’s previous firm commitment to defend the upper limit of 10-year government bond yields has indirectly helped the world maintain low borrowing costs. Now, the Bank of Japan has apparently been unable to withstand the pressure to continue buying government bonds. As the Bank of Japan's injection of liquidity into the market decreases, the liquidity brought by yen lending will inevitably decrease, and global assets will experience some turmoil as a result.
It is worth noting that investors, should not underestimate the impact of the Bank of Japan's unexpected turn on global markets. The impact is far from over.
In addition, investors also need to pay attention to developments in the situation in Russia and Ukraine.
Putin made a surprise visit to BelarusBelarus
Putin made a surprise visit to Belarus, which made the situation between Russia and Ukraine become tense again.
On December 19, local time, Russian President Vladimir Putin arrived in Minsk, the capital of Belarus, for a visit. Russia has previously stated that Putin will discuss regional security issues and joint response measures with Belarusian President Lukashenko during this trip. Uzbek military spokesman Major General Kovalchuk said on the 18th that the Uzbek army is preparing to respond to the Russian army launching an attack from the direction of Belarus.
The day before, Russian Defense Minister Sergei Shoigu visited the Southern Military District to inspect the deployment of Russian troops in areas where special military operations were carried out. Russian experts said that Shoigu's inspection may mean that the Russian army will launch a large-scale offensive.
What’s the future of gold?
From the perspective of technical aspect , gold technical aspect sends a bullish signal. As long as it holds US$1776.25, the price of gold is still expected to rise sharply in the future.
Gold prices are currently showing an uptrend and are trying to continue the bullish trend. Judging from the 4-hour chart, the stochastic indicator currently delivers a clear bullish signal. Now waiting for gold prices to rise further and hit our bullish target. The first bullish target for gold is $1,810.00, with a higher target at $1,824.50.
Gold prices are trading above the 50-period exponential moving average (EMA), which supports the continued upward trend in gold prices. Unless gold prices fall below $1,776.25 and remain below that level, bullish expectations will remain in effect.
predicts that today’s gold price trading will be between the support level of $1,776.00 and the resistance level of $1,810.00. The expected trend for gold prices today is bullish.
