empty
30.06.2022 09:56 PM
Gold is a long road to profit

Dear colleagues,

It has been a month since my last review of the gold market, and it will be useful for us to look at the implementation of my assumptions. Let me remind you that at that time traders were offered an algorithm for working with gold, designed for a period of one to three months. "If there is a trading system signal to buy, buy gold from the 1,850 value zone with a target at 1,900 and fixing losses at the level of 1,930. If the price decreases and there is a trading system signal, we sell #Gold from the 1,930 price zone with a target at 1,775 and an order to fix the loss beyond the level of 1,870".

Unfortunately, as is often the case with ranged assets, gold's upside breakthrough did not form and, remained in a short-term downward trend, #Gold price dropped below $1,830, which makes it possible to open short positions. However, let's not forget that the devil usually sits in the range, offering to play a fool with it, therefore, before opening shorts, let's look at the fundamental factors that are now acting on gold.

One of the negative factors affecting the price is the growth of Treasury bond yields and the increase in rates by the US Federal Reserve. Speaking at a conference organized by the European Central Bank, Fed Chairman Jerome Powell said that the US central bank can accelerate the rate hike at the next meeting and increase it immediately by 1.000%. This is not a good signal for an asset like gold. In addition, in the six months since the new year, the yield on the 10-year US Treasury bond has doubled and now stands at 3.004% per annum (Fig. 1). This means that from the point of view of long-term investments, gold is not yet in favor, because other assets give even more returns in dollars.

This image is no longer relevant

Figure 1: 10-year US Treasury yield

As you know, gold does not bring cash income to investors, therefore, with the growth of yields in the bond market, investors usually choose instruments that allow them to generate cash flow. This is very clearly seen in the investments of American investors, who actively left the gold market in May and June. In the week ending June 24 alone, North American exchange-traded funds lost 16.2 tons of gold due to the withdrawal of money from this segment.

In addition, lower consumer spending in the US and Europe and the need to spend more money on food and fuel are undermining the jewelry industry in these countries, which, although not directly involved in pricing, is a long-term demand factor. The slowdown in economic activity and closure of major cities in China are from the same series of reasons that negatively affect consumer demand.

Another important reason for the negative trends in gold is the growth of the US dollar. Gold, like all other goods, is denominated in US dollars, and the dollar has been growing against a basket of foreign currencies for many months, which puts pressure on the commodity market, and if essential goods can still overcome this trend and are actively growing in price, then in gold's case, everything is very difficult right now. Moreover, if the dollar index manages to overcome the level of 105.57, then this will mean the possibility of its further growth to the level of 110. Such a breakthrough will lead to a further weakening of the EURUSD rate and will be equivalent to a decrease to parity with the dollar, but for gold, the growth of the dollar will be a big test.

This image is no longer relevant

Fig. 2: Technical picture of the US dollar index

But in this scenario, it will be a certain win for investors from the eurozone. A depreciation of the euro, with a stable price of gold in dollars, will increase the price of gold in euros. However, the movement of commodity prices usually outpaces the movement of exchange rates, so if gold prices fall, then investors buying gold in euros are likely to lose more than they gain from the euro's depreciation against the dollar. Accordingly, with an increase in the price of gold, profit in euros will increase faster than the growth of the exchange rate.

Let's see how things are in the futures market, which is another element in the pricing of gold contracts. From the point of view of the analysis of the COT report, which traders submit to the US Commodity Futures Commission, speculators are now also in no hurry to invest in gold. Meanwhile, the role of this category of traders is very important for price growth. It is they who provide liquidity and activate demand, wanting to capitalize on price increases, and it is they who have a net positive position, being in fact buyers, taking risks from a decrease in quotes.

However, now the demand for gold in futures contracts is also at its lowest level since August last year, and the long positions of the main buyers indicate that they are not eager to buy gold, which means that we should not expect it to grow yet. By "so far" I mean a one to three month time horizon, and as we all need to understand, these are probabilistic categories.

Thus, the analysis of the fundamental situation confirms the possibility of a short-term sale of gold, which has the ticker #Gold in the terminals of InstaForex.

This image is no longer relevant

Fig.3: Gold, weekly timeframe

In addition to the readings of technical indicators, there is one more thing that we should take into account: this is a false breakout of the price up, the so-called "bull trap", which was formed from June 10 to 13 on the daily time frame, when the price first rose to the level of 1880, and then fell and almost went under the level of 1810. Of course, given that the price could not consolidate lower, the possibility of a return to the range cannot be ruled out.

When opening positions to sell gold, traders can take the support of the weekly timeframe as a guideline for targets, and, as follows from diagram 3, the targets for #Gold decline can be the levels of 1,750 and 1,700 dollars per troy ounce.

Be careful and cautious, follow the rules of money management.

Daniel Adler,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Alexandr Babenko
Start trade
通过InstaForex赚取加密货币汇率变动的收益。
下载MetaTrader 4并开启您的第一笔交易。
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

推荐文章

市場無所畏懼

S&P 500 指數再創歷史新高,輪動現象成為美國股市的特徵。投資者積極買入上半年表現不佳的股票,反觀此前增長領先的股票現在表現落後。

Marek Petkovich 10:50 2025-07-11 UTC+2

7月11日有什麼重要動態?給初學者的基礎概覽

週五的宏觀經濟發布計劃非常少,但其數量仍然比本週任何先前的日子都多。英國將公佈國內生產總值(GDP)和工業生產數據。

Paolo Greco 08:50 2025-07-11 UTC+2

英鎊/美元 2025年7月11日概覽

週四,英鎊/美元貨幣對未能鞏固在移動平均線之上,因此修正仍在繼續。 整個週四,英鎊/美元對未能穩住在移動平均線之上,因此修正仍持續進行。

Paolo Greco 07:15 2025-07-11 UTC+2

2025年7月11日,歐元/美元概況

EUR/USD 貨幣對在週四時逐漸下滑。我們繼續等待目前的調整結束,並期待上升趨勢的恢復。

Paolo Greco 07:08 2025-07-11 UTC+2

XAU/USD。分析及預測

金價連續第二天保持正向動能。美國總統特朗普的貿易政策及其對全球經濟的影響持續引發不確定性,令投資者情緒受到影響。

Irina Yanina 19:24 2025-07-10 UTC+2

美元/瑞士法郎。分析與預測

今天,美元/瑞士法郎組合從亞洲交易時段錄得的新週低點回升了一部分,暫時停止了其下滑趨勢,未能突破心理關口0.8000。然而,由於信號混雜,即期價格仍然維持在0.7940附近,反映出缺乏強勁的上升動力。

Irina Yanina 12:26 2025-07-10 UTC+2

市場愚弄賣家

美聯儲的內部分歧、NVIDIA的成功,以及10年期美國國債拍賣的成功,使得S&P 500對關稅混亂置若罔聞。唐納德·特朗普宣布自8月1日起對銅征收關稅,並發送了有關進口關稅率的其他信函。

Marek Petkovich 12:02 2025-07-10 UTC+2

7月10日需要關注的事項:初學者的基本事件概覽

宏觀經濟報告分析: 星期四的宏觀經濟發表相當稀少,且預計不會有重要的數據發布。因此,今日交易者應關注什麼?德國消費者物價指數的第二次估算?或是美國的失業金申請數據?基於當前的宏觀經濟背景,預計不會有強烈的趨勢運動。

Paolo Greco 09:07 2025-07-10 UTC+2

2025年7月10日英鎊/美元概況

週三,英鎊/美元貨幣對維持了其下降趨勢,這是修正性質的,可能在任何時候結束。價格保持在移動平均線以下,本週並無重大宏觀經濟發展。

Paolo Greco 07:26 2025-07-10 UTC+2

2025年7月10日的EUR/USD概覽

歐元/美元貨幣對在週三持續呈現非常平靜的交易狀態。 該對保持輕微的下行偏置,正如我們在所有最近的文章中所提到的。

Paolo Greco 07:16 2025-07-10 UTC+2
现在无法通话?
提出您的问题,用 在线帮助.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.