The price of gold fell after reaching a 7-year high. If it falls below this range, the decline is expected to increase.
Tensions between the United States and Iran and fluctuations in financial markets affected the price of gold last week. The price of gold closed slightly higher last week and closed at the low end of the weekly trading range. It had previously reached a high of nearly seven years earlier. James Hyerczyk believes that the movement of gold prices last week was driven by geopolitics. The rebound has been linked to escalating tensions in the United States and Iran earlier last week. After the words of officials in both countries eased the tension, the profit-taking of the market triggered a sell-off of gold.
News headlines drive the price of gold, but fluctuations in financial markets also have an impact. Treasury yields fell earlier last week, making dollar assets less attractive, while dollar-denominated demand for gold rose. As soon as the news of the tense situation in the United States and Iran came out, the market demand for risky assets fell for the first time, encouraging investors to seek low-yield safe assets.
As investors returned to high-yielding assets, gold prices fell.
James Hyerczyk therefore concludes that investors will periodically transfer funds from high-yield assets to low-yield assets and vice versa. When dealing with real money, there is no sense of security at all. Investors either make money or lose money.
Gold is an investment product and must be treated as an investment product. Therefore, investing in gold will follow the same rules of other investments, that is, buy low and sell high. Buy when no one wants it, and sell it when someone wants it.
It is worth noting that no event or news can control gold. In November and December 2019, when gold fundamental support factors emerged, buyers hoarded gold in the hope that the China-US trade agreement would weaken the attractiveness of the US dollar as a hedging tool. As it turned out, their judgment was correct. As the dollar weakened against a basket of currencies, and as investors moved away from long positions established to guard against trade uncertainty, the price of gold did indeed strengthen.
Focus on whether the price of gold has dropped back to $ 1533.20-1514.30 this week James Hyerczyk believes that for gold investors (not speculators), the first gold price range to watch this week is $ 1533.20 to $ 1514.30.
In other words, if investors find an excuse not to buy at the low of $ 1,145.70 on November 12, and are unwilling to continue to chase the high of $ 1,161.42 on January 8, then why not pay attention to the 50% -61.8% position in this range How about it?
James Hyerczyk said the market is likely to respond to US inflation and retail sales reports as there are no major geopolitical events this week. Beijing time on January 14th (Tuesday) 21:30 will release the US December CPI data, January 16th (Thursday) 21:30 will release the United States December retail sales data.
Other events of interest are the minutes of the December ECB meeting at 19:30 on January 16, and the speech of ECB President Lagarde on January 17. In addition, China ’s fourth quarter GDP data at 10:00 on January 17 may also affect the market.
In James Hyerczyk's opinion, the near-term trend of the price of gold will depend on the market's reaction to its fall to $ 1533.20-1514.30. If the price of gold stabilizes below $ 1533.20, the market will work hard to find a rebound momentum. If the price of gold falls below $ 1514.30, selling pressure will increase and may fall until investors find the true value.
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