The outlook of gold market this week: if it falls, it will rise

Last week, the price of gold was staggering. The price of gold fluctuated $107 between a peak on Tuesday and a low on Friday, ending up 50 cents last week after a week of $129. Gold fluctuates violently for two weeks in a row, like wild horse gas in commodities that cannot be tamed.

Gold price fluctuates violently, unscientific and confusing

Darian Hayton, a historian of science, warned traders not to abuse Newton’s third law of motion. Darian Hayton said Newton made it clear that the law was about macro objects, not about people, the stock market, exchange rates, bitcoin, gold or “the price of cabbage in a local organic market.”.

The author may have made the same mistake, but I quote Newton’s words here to say that it is unscientific or even illogical to explain last week’s gold price fluctuation with the dollar “strengthening”. In fact, at the end of the day, the dollar has not strengthened at all.

On the third day of last week, the dollar rebounded, while gold fell, repeating the previous week’s scenario. On Wednesday, the dollar rebounded mainly because of the minutes of the July monetary policy meeting released by the Federal Reserve. The minutes showed that the Fed did not consider controlling the yield curve at its July 28-29 meeting.

For most of the past two months, the benchmark yield on US Treasury bonds has been in a negative range, and foreign exchange traders have been looking forward to the Fed’s ability to maintain yields at this level through the yield curve control tool.

Last week, the price of gold was staggering. The price of gold fluctuated $107 between a peak on Tuesday and a low on Friday, ending up 50 cents last week after a week of $129. Gold fluctuates violently for two weeks in a row, like wild horse gas in commodities that cannot be tamed.

Gold price fluctuates violently, unscientific and confusing

Darian Hayton, a historian of science, warned traders not to abuse Newton’s third law of motion. Darian Hayton said Newton made it clear that the law was about macro objects, not about people, the stock market, exchange rates, bitcoin, gold or “the price of cabbage in a local organic market.”.

The author may have made the same mistake, but I quote Newton’s words here to say that it is unscientific or even illogical to explain last week’s gold price fluctuation with the dollar “strengthening”. In fact, at the end of the day, the dollar has not strengthened at all.

On the third day of last week, the dollar rebounded, while gold fell, repeating the previous week’s scenario. On Wednesday, the dollar rebounded mainly because of the minutes of the July monetary policy meeting released by the Federal Reserve. The minutes showed that the Fed did not consider controlling the yield curve at its July 28-29 meeting.

For most of the past two months, the benchmark yield on US Treasury bonds has been in a negative range, and foreign exchange traders have been looking forward to the Fed’s ability to maintain yields at this level through the yield curve control tool.

For most of the past two months, the benchmark yield on US Treasury bonds has been in a negative range, and foreign exchange traders have been looking forward to the Fed’s ability to maintain yields at this level through the yield curve control tool.

The Fed’s opposition to the use of yield curve control tools gave foreign exchange traders an excuse to push up the dollar, regardless of Congress’s trillions of dollars in economic stimulus and the Fed’s commitment to continue to expand its balance sheet to support an economy hit by public health.

In addition, the U.S. new home sales and PMI data supported the US dollar on Friday, but the US dollar remained at the 93 level, confusing those who believe that the fair value of the US dollar is below 92.5.

Behind the rise of the US dollar and gold price?

Some traders believe that there is illegal behavior behind the rise in bond yields and the dollar in the past two weeks, which has created a “up throw up” trend, which first drives the dollar up, gold falls, and then the reverse, while those who make the right order can make two-way profits.

Just on Wednesday, the same day gold and the dollar began to fluctuate sharply, the commodity futures trading commission imposed a record fine of $77.4 million on Scotiabank for alleged gold fraud eight years ago. Even in the rising gold market, such illegal activities can be carried out in both directions, and it will take years for the investigation to be completed and confirmed, but we can not rule out this possibility, especially the unreasonable rise of the US dollar last week.

The door to gold’s return to $2000 is not closed. The opportunity is at the Jackson Hole annual meeting of global central banks

Back to gold, analysts believe the door to a return to $2000 this week is not closed.

Some say one of the opportunities for gold to return to $2000 is at the Jackson Hole annual global central bank meeting in Wyoming. The meeting is likely to encourage gold bulls and dollar bears to move again.

Federal Reserve Chairman Jerome Powell will deliver a speech on the review of the Federal Reserve’s monetary policy framework at an online meeting on August 27-28. Analysts expect Powell’s speech will further emphasize the maintenance of extremely low interest rates and strengthen the tone of currency depreciation, which is expected to bring the dollar bulls back to their senses.

“If Powell signals that higher than target inflation will be tolerated, gold prices may return to a record high of $2075, which will exacerbate the fall in real or inflation adjusted bond yields and trigger another sell-off of the dollar,” said Omkar godbole of FX street

December gold futures echoed Omkar godbole’s comments, closing last week at $1947.60, up 80 cents from the closing price in normal trading hours.

Ed Moya, an analyst with OANDA in New York, said, “the best thing for gold right now is that the economy continues to recover, but the pace is not stable, thus consolidating the need for more fiscal and monetary stimulus.” “There are still too many risks ahead for anyone to give up gold.”

As of 21:44 Beijing time (09:44 a.m. EDT), commodity prices showed:

Spot gold rose $2.03, or about 0.1 percent, to $1942.74 an ounce.

Gold futures rose $3.10, or about 0.16 percent, to $1950.10 an ounce.

Dollar index futures, a measure of the U.S. dollar against six major trade weighted currencies, fell 0.24% to 93.015.

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