Gold Traders Wondering: Is 2022, 2020(too) for Gold?

The FOMC published the minutes on 05 January, 2022 from its last meeting, held in mid-December. Although the publication doesn’t reveal any revolutions in US monetary policy, it strengthens the hawkish rhetoric of the Fed. The FOMC participants acknowledged that inflation readings had been higher, more persistent, and widespread than previously anticipated. For instance, they pointed to the fact that the trimmed mean PCE inflation rate, which trims the most extreme readings and is calculated by the Dallas Fed, had reached 2.81% in November 2021, the highest level since mid-1992, as the chart below shows. It indicates that inflation is not limited to a few categories but has a broad-based character. The consequence of higher inflation and a tighter labor market would be, of course, a more hawkish monetary policy. Although the central bankers didn’t discuss the appropriate number of interest rate hikes, they agreed that they should raise the federal funds rate sooner or faster. Fed officials also discussed quantitative tightening. They generally agreed that – given fast economic growth, a strong labor market, high inflation, and bigger Fed assets – the balance sheet runoff should start closer to the policy rate lift off and be faster than in the previous normalization episode. Almost all participants agreed that it would likely be appropriate to initiate balance sheet runoff at some point after the first increase in the target range for the federal funds rate. However, participants judged that the appropriate timing of balance sheet runoff would likely be closer to that of policy rate lift off than in the Committee’s previous experience. They noted that current conditions included a stronger economic outlook, higher inflation, and a larger balance sheet and thus could warrant a potentially faster pace of policy rate normalization.

KEY HIGHLIGHTS

• Gold languished near a two-week low amid a goodish rebound in the equity markets.
• Subdued USD price action extended some support to the dollar-denominated metal.
• Investors also seemed reluctant to place aggressive bets ahead of the US NFP report.
• St. Louis Fed President James Bullard said that the Fed could raise rates as soon as March and is now in a good position to take more aggressive steps to control inflation.
• The minutes of the December FOMC meeting released on Wednesday showed that some policymakers want to tighten monetary policy faster to combat stubbornly high inflation.
• The yield on the benchmark 10-year US government bond (currently at 1.727, rising from 1.5 zone) shot to levels not seen since March 2021.
• Investors, however, preferring to wait and see if the US jobs data (NFP), due later during the early North American session, would reinforce the need for higher interest rates.
• US dollar bulls on the defensive and extended some support to the dollar-denominated gold. Nevertheless, the commodity, at current levels, remains on track to post the biggest weekly decline since late November.
• Preliminary figures for gold futures markets indicate open interest rose for the second session in a row on Thursday, this time by around 10.6K contracts. In the same direction, volume extended the uptrend and went up by nearly 80K contracts to nearly 282K contracts, the largest level since November 26.
• Important SR Price Levels to watch: same numbers I have been posting since 12 August 2020:BUY/SELL STOPS | BUY/SELL LIMITS: TARGET NAP :DOWN TREND: 1777 – 1745 – 1717 – 1707
  UP TREND      :  1796 – 1808 – 1818 – 1832
• Gold price is trying to make a fading recovery attempt from eleven-day lows of $1,786 reached on Thursday, as bears take a breather ahead of the all-important US Nonfarm Payrolls release. A solid NFP publication is likely to back the speculation around aggressive Fed rate hikes, boosting the Treasury yields and the US dollar once again at gold’s expense. Meanwhile, gold price could benefit from profit-taking in the dollar ahead of the key event risks. The improving market mod weighs down on the safe-haven greenback, aiding the recovery in the bright metal, for now.Technically, gold price remains vulnerable as it has taken out all the major Daily Moving Averages (DMA), with the downside exposed towards $1,775 should the December 21 low of $1,785 give way.Major media portals, analysts are indicating a crash in GOLD prices till the level of $1750 justifying through statements like: “Prices of the yellow metal accelerated their losses on Thursday. The leg lower came amidst increasing open interest and volume, which should be supportive of the continuation of the downtrend in gold, at least in the very near term. That said, the next target of note comes at December’s low at $1,753 per ounce troy (December 15).”

  Last but not the least escalating geo-political tensions related to Ukraine and Russia, US-China and OMICRON – COVID – IHU – Florona can be the game changers by the end of January or before next Non – Farm Pay Rolls data is published.

• IMPORTANT TECHNICAL LEVELS & readings

Expected date of the above-mentioned price action A and B: 18 January, 2022.

Kindly observe the crucial limits/stops levels mentioned by me in this analysis. Today, I will BUY the daily and session lows below or near Support zones with a target of Net Average Price in every set, since I am a retracement based trader, and I do not go with the trend, I believe fundamentals makes technicals, always! I prefer to BUY lows in Support zone, and I prefer to sell in Resistance zones, I fundamentals support and favour the same.

It is always wise to PLAN THE TRADE, and then TRADE THE PLAN! Hence it is suggested to first observe the crash or rise with specific zones and levels in mind on the basis of various fundamental and technical parameters, before entering a trade in a specific direction with a target of net average profit.

U.S. stocks set to open higher; NFT marketplace breathes life into GameStop

U.S. stock markets are set to open moderately higher but all will depend on the payrolls report between now and the official open an hour later. Stocks had extended their declines on Thursday after comments by two regional Federal Reserve officials made hawkish sounding but largely familiar noises about the policy outlook.

By 6:20 AM ET, Dow Jones futures were up 54 points, or 0.2%, while S&P 500 futures were up 0.3% and Nasdaq 100 futures were up 0.4%. Long-term government bond yields were steady after retracing their gains on Thursday – a suggestion that the Fed’s attempts to keep inflation expectations anchored by tough talk are succeeding.

Stocks likely to be in focus later include GameStop stock, which rose 17% in premarket trading after the meme stock company announced plans to launch a marketplace for non-fungible tokens. The combination of meme stock and crypto fever was enough to breathe fresh life into one of last year’s most active speculative assets, which has been in downward drift for the last eight months as its fundamentals stubbornly refuse to improve.

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