2024-02-15 07:48:00
Gold’s rebound following plummeting is fragile. Can U.S. retail sales bring a positive wind?Experts change their tune to be bearish on gold and bullish on silver
As of the beginning of the European market on Thursday (February 15), gold has rebounded in the short term by more than $3 to the 1993 line. Although it has stopped falling based on the 100-day moving average, the overall bulls are still relatively fragile. Overseas analysts are bearish on gold prices, with key supports looking at 1973 and 1965, and important resistances looking at 1993, the 2000 mark and 2024. Fundamentals: U.S. retail sales and other data are forecast to be weak, and expectations of an interest rate cut by the Federal Reserve may regain control of market sentiment. The well-known financial best-selling author suddenly reversed his position and turned bearish on gold below 1200? But continue to be bullish on silver.
Overseas analyst Dhwani said that before the release of retail sales data, the Federal Reserve had mixed remarks and the US dollar adjusted with Treasury yields. Gold prices remain in a “sell on rebound” trade as technical conditions favor sellers. She said that gold prices need to regain the key level of $1,993 before there is a chance for a comeback.
She pointed out that as seen on the daily chart, gold prices closed below the 100-day simple moving average (SMA) at $1,993 on Wednesday, opening the door for further losses.
Specific bearish technical signals include: The 14-day relative strength index (RSI) is trying to recover but remains well below its midline, suggesting that any rebound in gold prices may be temporary. Meanwhile, the 21-day and 50-day moving average bearish crossover confirmed last week is also still in play, providing support to gold sellers. Therefore, any corrective rise in gold prices is expected to be a “sell on the bounce” trade in the near term.
(Technical analysis of spot gold daily chart, source: Yihuitong)
Key Support: Currently located at the December 13, 2023 low of $1,973, and the 200-day moving average at $1,965. A sustained break below the latter would put the psychological $1,950 level at risk.
Important resistance: If the gold price successfully closes the 100-day moving average support-turned-resistance level of $1,993 on a daily closing basis, the possibility of rebounding to the 21-day moving average of $2,024 cannot be ruled out. Gold needs to find a strong footing above the $2,000 mark.
[U.S. retail sales may be weak, and expectations of a Fed rate cut may regain control of market sentiment]
So far, sentiment in Thursday’s session remains mixed as investors assess conflicting messages from Federal Reserve policymakers and their implications for pricing in a dovish policy pivot this year.
Uncertainty over the timing of the Fed’s rate cut following strong US non-farm payrolls (NFP) and consumer price index (CPI) data for January kept the correction pattern in the dollar and US Treasury yields intact.
Michael Barr, the Fed’s vice chairman for supervision, said on Wednesday that the central bank remained confident but that January CPI data showed that the road to returning U.S. inflation to 2% “might be bumpy.” He said he fully supports a cautious approach to considering policy normalization under current conditions.
Meanwhile, Japan unexpectedly slipped into recession following two consecutive quarters of negative growth, and new worries regarding the country’s economic outlook have also unnerved investors.
Concerns regarding an economic recession may support the price of traditional safe-haven gold. In addition, expectations that U.S. retail sales will fall by 0.1% in January also help gold prices recover some of their losses. Disappointing U.S. retail sales data might point to weak consumer demand and revive expectations for a rate cut from the Federal Reserve.
Agency NBF: U.S. retail sales are expected to drop 0.5% month-on-month in January – National Bank of Canada Wealth Management (NBF) pointed out that sales of automobiles and parts and gas stations may have a negative impact on the overall U.S. retail sales data in January. Meanwhile, other industries might be hit by severe weather and see losses, particularly the food service industry. All told, we expect overall retail sales to contract 0.5%. Expenditures other than automobiles may have been slightly worse, falling 0.4% month-on-month.
Wells Fargo: U.S. retail sales are expected to increase by 0.1% in January, and will increase by 0.3% following excluding auto sales. Over time, a slowing job market is expected to lead to slower spending. The unique factors of excess liquidity and easy access to cheap credit have become a thing of the past for consumption.
The market currently expects that the Federal Reserve will not cut interest rates in March, and the probability of easing in May is less than 50%. Now, investors can see the possibility of a pivot from the Fed at its June meeting.
In addition to U.S. retail sales data, market focus will continue to focus on initial jobless claims and speeches by Federal Reserve officials to find new clues regarding the Federal Reserve’s interest rate cut expectations, which will ultimately affect the price of gold priced in U.S. dollars.
[Reverse stance, turn bearish on gold below 1200? Continue to be optimistic regarding silver]
Robert Kiyosaki, author of the well-known best-selling book “Rich Dad Poor Dad”, made a rare reversal of stance in a tweet on Thursday (February 15). He warned that gold may fall below $1,200, but insisted that silver will take off. He previously believed that the S&P was regarding to plummet 70%.
Kiyosaki tweeted regarding Andy Schectman, the boss of precious metals trader Miles Franklin, writing: Schectman raises a very important question, who will buy the U.S. Bond? Banks are buying gold instead of US debt.
He continued: What will the United States do if it has no money? How will the world work? What would you do without money? ——He said that gold may fall below $1,200 and silver will take off, so please remain cautious.
Market analysts say that such a huge debt in the United States increases the risk of eventually being unable to repay the debt and triggering a U.S. debt crisis, which may one day eventually lead to a default on U.S. Treasury bonds.
Before warning that gold would fall toward $1,200, Kiyosaki wrote at the beginning of the week: Some financial planners recommend investing in gold and silver. Gold has consistently outperformed the S&P for decades. The S&P is regarding to plummet 70%, don’t be a loser, choose your financial advisor carefully.
He said: Be prepared for the biggest crash in history. I predicted a crash in my book “Rich Dad’s Prophecy” a few years ago. Stay cautious.
He had previously warned the market that an economic collapse was imminent and urged investors to invest in gold and silver.
At 15:24 Beijing time on February 15, international spot gold was quoted at US$1,992.92 per ounce, up slightly by 0.05%; spot silver was quoted at US$22.493 per ounce, up by 0.64%.
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