Weekly Outlook: With the Federal Reserve’s resolution superimposed on the earnings reports of technology giants, how far can gold’s rebound go?
Written by: Jerry Chen, Senior Analyst of GAIN Capital Group When it hit $100 and the 10-year U.S. Treasury yield exceeded 4.6%, Trump unsurprisingly took another TACO, which added more variables and expectations to this week's central bank and earnings super week. The U.S. military suspended its air strikes against Iran for 13 consecutive days over the weekend. Iran stated that it would stop retaliating but was still skeptical about the progress of the situation. However, the market once again saw the dawn of diplomatic mediation. International oil prices gapped lower and opened lower on Monday, dragging down the US dollar. Gold opened straight up and touched US$4,100, and non-US currencies generally rebounded. This week's economic calendar is extremely busy, with not only interest rate decisions from the Federal Reserve, the Bank of England, and the Bank of Japan, but also the peak of the U.S. second-quarter earnings season. In terms of economic data, focus on inflation data from the United States, Japan and Australia. · Federal Reserve Interest Rate Decision – Thursday (02:00) This is undoubtedly the absolute focus of this week. The unexpected drop in U.S. inflation in June briefly boosted market hopes for a postponement of interest rate hikes. However, as oil prices surged in mid-July, inflation risks became highlighted again. The market expects that the probability of the Federal Reserve raising interest rates this week is 33%, which shows that this possibility has not been completely ruled out (an unexpected interest rate hike will be good for the US dollar and gold will be under pressure). Of course, the greater possibility is to keep interest rates unchanged and continue to maintain a hawkish tone. If 1-2 of the voting members agree to raise interest rates this time, it will be a more obvious hawkish signal. Looking forward to the second half of the year, the interest rate market believes that interest rates will be raised at least once, and the probability of September is currently around 76%. · Bank of England and Japan interest rate decisions The market also expects the Bank of England (19:00 Thursday) and the Bank of Japan (Friday) to remain on hold this week. The British CPI unexpectedly fell to 2.6% in June and the job market is weak. It is difficult to send a hawkish signal at this meeting. The central bank may wait for the new government's fiscal policy (tax cuts may stimulate inflation) to become clear before making a decision. Interest rate markets expect the central bank to raise interest rates at least once this year. The Bank of Japan's interest rate hike prospects may be more susceptible to Japan's economic and fiscal policies (which may delay interest rate hikes). As the effect of central bank intervention is becoming increasingly limited, it will be difficult for the yen to escape its current weakness if the central bank is unable to implement a faster path of interest rate hikes. In addition, Japanese authorities are unlikely to intervene during the peak of this week's central bank meeting. · US stock market earnings report reaches peak This week is the busiest week in the earnings season, with about one-third of the S&P 500 stocks reporting earnings, including Microsoft, META, Apple and Amazon. Samsung Electronics and SK Hynix will also announce results this week. According to LSEG statistics, the second-quarter earnings of the S&P 500 so far have increased by 26.5% year-on-year. Although it is amazing enough, excessive AI capital expenditure is currently the biggest concern of investors. Google's heavy setback in its earnings report last week means that even if its performance and outlook are optimistic, excessive AI spending and negative cash flow will still be punished by the market. This also sets the tone and reference for the stock price reactions of other giants this week. Another test of confidence in AI this week is the listing on the Science and Technology Innovation Board of Changxin Technology (CXMT), the world’s fourth-largest memory chip manufacturer and China’s largest. Key economic data this week include the U.S. June PCE price index and second-quarter GDP (Thursday 20:30), Australia’s June CPI (Wednesday), and the Eurozone’s July CPI (Friday). With the exception of Australian inflation data, inflation data from the United States and Japan have had a limited impact on the outlook for interest rates or currency movements. XAUUSD Prime 4 hours As shown in the figure, gold stopped falling near $4,000 last week and started a technical rebound. However, it lacked fundamental resonance at that time, so it gave up its gains after The weekly line rose only slightly. After the opening of this week, as the change in the geopolitical situation led to a correction in the US dollar, the price of gold showed positive results both technically and fundamentally, and is expected to continue its rebound momentum at the beginning of this week. As shown in the chart, in the short term, gold prices are challenging the trend line and moving average resistance near 4110. Considering the rising lows and the bullish engulfing pattern formed near 4023 and 4050, the probability of a breakout is not low. Once broken, $4155 will be the primary target for bulls, followed by the 4200/20 area (the upper edge of the bottom swing range).
But there are still too many variables in whether gold can start a trend reversal. The potentially hawkish tone of the Federal Reserve meeting early Thursday morning may put considerable pressure on bulls. In addition, whether the ceasefire between the United States and Iran can be sustained remains to be verified. Nasdaq 100 Index 4 hours The Nasdaq 100 index barely stopped falling near 28,100 after hitting a new low since May last week. Divergent technical indicators suggest that the short-term trend is expected to be corrected. If it can break through 28,600, it is expected to hit the 29,000 line. However, the current market sentiment is still pessimistic, and we still need to wait for the results of the financial reports of technology giants this week to test market confidence. Until then, continue to pay attention to the risk of the index rising and falling. We do not rule out the possibility that support will be clear only after repeated bottoming. It is worth noting that the listing of Chinese chip giants will undoubtedly intensify the AI competition between China and the United States, which has a potential impact on American technology giants. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed
But there are still too many variables in whether gold can start a trend reversal. The potentially hawkish tone of the Federal Reserve meeting early Thursday morning may put considerable pressure on bulls. In addition, whether the ceasefire between the United States and Iran can be sustained remains to be verified. Nasdaq 100 Index 4 hours The Nasdaq 100 index barely stopped falling near 28,100 after hitting a new low since May last week. Divergent technical indicators suggest that the short-term trend is expected to be corrected. If it can break through 28,600, it is expected to hit the 29,000 line. However, the current market sentiment is still pessimistic, and we still need to wait for the results of the financial reports of technology giants this week to test market confidence. Until then, continue to pay attention to the risk of the index rising and falling. We do not rule out the possibility that support will be clear only after repeated bottoming. It is worth noting that the listing of Chinese chip giants will undoubtedly intensify the AI competition between China and the United States, which has a potential impact on American technology giants. Open a futures account on Sina's cooperative platform, safe, fast and guaranteed