August 29 gold trading reminders: Powell "hawk hit the long sky" dollar refresh more than 20 years high, gold prices hit a month low, again pointed to 1700

By    29 Aug,2022

Spot gold shock weakened, extending Friday's decline, once hit a new low of nearly a month to $ 1725.96 / oz. Last Friday, Fed Chairman Powell said the Fed will not reverse its position before inflation is under control, reinforcing market expectations of a 75 basis point rate hike in September, helping the U.S. dollar index to reverse the decline to rise, further refreshing more than 20 years high to 109.31 on Monday, which weighed significantly on gold prices. Gold prices declared defeat above the middle Bollinger Bands, and the short term bearish signal has significantly strengthened. This week, it is expected to test the support around 1714.48, the lower Bollinger Bands, or even the 1700 mark.


Tai Wong, senior trader at Heraeus Precious Metals, said, "Stocks and metals are being influenced by Powell's unvarnished reminder that rates will need to stay higher for longer, and perhaps a 75 basis point hike is the default for September, unless the full data suggests otherwise. "

Philip Streible, chief market strategist at Blue Line Futures, said gold will continue to come under pressure as it will have to deal with higher interest rates due to Powell's lack of a dovish shift.

But Standard Chartered (Standard Chartered) analyst Suki Cooper said in a report, although gold may trend lower in the coming months, but most of the downside risks have been digested.

This trading day focus on the impact of Fed Chairman Powell's speech on Friday to further ferment the situation, pay attention to the Russian-Ukrainian geopolitical situation and the European Central Bank chief economist Lienen to deliver a speech.

The main negative fundamentals

Powell said straightforwardly that the Fed will not reverse its stance until inflation is under control]

Federal Reserve Chairman Jerome Powell warned on Friday that Americans will enter a painful period of slow economic growth and potentially rising unemployment as the Fed raises interest rates to fight inflation, which is at a 40-year high, telling people in his most blunt words yet about the challenges the U.S. economy will face.

Powell said in his opening remarks for the central bank seminar in Jackson Hole, Wyoming, on Friday that the Fed will raise borrowing costs to the level needed to limit growth and will remain at that level "for a period of time" to push inflation back down. The current U.S. inflation rate is more than three times the Fed's 2 percent target.

"Lower inflation may require economic growth to remain below trend for some time. In addition, labor market conditions are likely to soften somewhat," Powell said." While higher interest rates, slower growth and softer labor market conditions will push inflation back down, it will also cause some pain for households and businesses. These are the unfortunate costs of lower inflation. But failure to restore price stability will mean even greater pain."