September 1 gold trading alert: dollar strong hold near more than 20-year highs, high interest rate hike expectations, gold prices sword pointing to 1680?

By    1 Sep,2022

Thursday (September 1) Asian session, spot gold shocks down, once refreshing the low since July 22 to $ 1703.80 / ounce, extending the overnight decline. Wednesday, the U.S. ADP data performance was mediocre, once in the session to provide gold prices rebound opportunities, but Cleveland Fed President Mester said interest rates need to rise to "slightly above" 4% by early next year, the Fed will not cut interest rates next year, which further dampened the morale of the bulls.


In addition, the market on the European Central Bank interest rate hike in September 75 basis points is expected to further heat up, the Bank of England interest rate hike pressure also increased further, the market is expected to the Bank of England in September will raise interest rates by 50 basis points, which makes the opportunity cost of holding non-interest-yielding assets gold rising, reducing the attractiveness of gold.

Edward Moya, senior analyst at OANDA, said it is becoming clear that central banks will tighten aggressively due to unprecedented inflationary pressures, which is not good for gold.

Of course, in the short term, investors also need to pay attention to the geopolitical situation, the U.S. stock plunge triggered by safe-haven buying and low-buying support for gold prices.

This trading day focus on the U.S. August ISM manufacturing PMI data and the U.S. initial jobless claims change, pay attention to the market on the U.S. August non-farm expectations change, before the non-farm expectations deteriorate, gold prices face further downside risk, initial support near the 1700 mark, strong support in July lows near 1680.79. If market expectations for a slowdown in U.S. job growth heat up, it is expected to provide some rebound opportunities for gold prices.

Major Fundamental Negative

Fed's Mester: Interest rates need to rise to "slightly above" 4% by early next year, no rate cuts next year

Cleveland Fed President Mester (Loretta Mester said Wednesday that the Fed) will need to raise interest rates above 4 percent by early next year and then keep them there in order to bring excessive inflation back to target levels.

In prepared remarks at a local chamber of commerce in Dayton, Ohio, Meister said, "My current view is that it will be necessary to raise the federal funds rate above 4 percent by early next year and keep it there; I don't expect the Fed to cut its federal funds rate target next year."