Gold sells off, sentiment peaks

Yesterday, the State Administration of Foreign Exchange increased gold reserves for the 12th consecutive month. Gold reserves increased to 70.46 million ounces in September. It increased to 71.2 million ounces in October, an increase of 74 tons.

In addition, the scale of foreign exchange reserves in October was US$3.1012 billion, a decrease of US$13.8 billion or 0.44% from September.

Why do we continue to increase our holdings of gold and reduce our holdings of foreign exchange reserves?

Gold has the function of hedging and anti-inflation. From 65.12 million ounces of gold reserves at the beginning of the year, the increase in gold holdings reached 9.3% last month. In order to balance the diversification of foreign exchange reserves and to diversify risks, increasing gold holdings can Reduce the impact of foreign exchange fluctuations on reserve assets.

In addition, since the U.S. economy is already on the verge of recession, whether it is the Federal Reserve's interest rate increase or future interest rate cut, it actually shows that the economic situation under the influence of high inflation in the United States is not optimistic, which is also one of the reasons for the reduction of our foreign exchange reserves.

So, after gold hits $2,000 in stages, will it be a deep downward adjustment or a staged correction in the future?

In fact, the premise to answer this question is how far we intend to see.

Just looking at it over time, it has increased by more than 200 US dollars in the past month, and it is normal for downward revisions.

Looking further ahead, the drop in gold prices is an opportunity for long-term investment. This depends on different configuration requirements.

This week, it opened lower for the fourth time on Monday and continued to trend lower. Even if the non-agricultural data was positive, it was short-lived. It rose and fell and continued to weaken. Especially yesterday, it fell all the way to below $1,960 during the session, and the market had a strong bearish sentiment.

In particular, the risk aversion caused by the Middle East has begun to subside. In addition, there are different opinions on whether the Federal Reserve will suspend interest rate hikes or start to cut interest rates in the future. Some hawks of Fed officials insist that the interest rate hikes are not over and there is still room, while doves Officials have strongly called for a halt to interest rate increases and instead put interest rate cuts on the agenda.

In fact, the Fed's monetary policy is not the opinion of one person. Powell is just the speaker. The specific policy implementation requires voting by the voting committee. It is a dynamic decision-making based on different market reactions.

The key point is that the results of the U.S. CPI data in October will directly affect the market's decision on whether the Federal Reserve will continue to maintain high interest rates or start to cut interest rates. If the CPI data in October unexpectedly rises, exceeding September's 3.7%, then interest rate cuts will be stopped. Face, causing the market to continue to short gold.

Therefore, the adjustment of gold price will still continue, but the space will not be too large. If you pursue intraday gaming, you don’t need to care about the long-term policy impact. You only need to focus on the short-term benefits brought by the current fluctuations. If it is a long-term allocation, or it is a Gold configurations that are risk-averse or anti-channel can start to intervene. As a result, gold has formed a large-scale decline, with limited fundamental support.

In the picture above, the recent adjustment of gold price is close to the relative extreme support area of ​​1953-1948. For the day, relying on the pressure area of ​​1970-72 previous top-to-bottom transition, it fell back. In the long term, this is a relatively large adjustment.

For gold, focus on the area touching 1955-1950. Today’s pressure is 1971-72.