In the market, the Fed raised interest rates to 5%. But it also shows that further increases in borrowing costs will be stopped based on the current market conditions. However, at the subsequent press conference, the Chairman of Federal Reserve, Powell stated that the Fed does not expect to reduce interest rates in 2023. Although Powell is still not letting go on raising interest rates, the latest statement made the public see that the rate hike is biased towards dovish. The wording like "it may be appropriate to continue to raise rates" conveys exactly what might or might not be appropriate. However, gold has now raised more than 7%, and has once again reached its record high above USD2,000 in March 2020.

If there is a banking crisis or more serious financial problems in the future, people will cut on spending and economic growth will slow down accordingly. If the economy falls into recession again, expectations for the Federal Reserve to reduce interest rates by the end of 2023 will be greatly enhanced, so there will be greater appeal on investing gold during the period of financial instability. 

Technically, the target of USD 2000 has been attained. Currently, the gold fell back after breaking through 2,000 points. After all, the bulls still need to make repeated adjustments to confirm the support position to start again. This shows to a certain extent that the rising trend of gold is determined to win and how stable the support below is. As shown in the picture: we can see that the current k-line is still going up strongly. After 3 weeks of rising, the gold price is still stabilizing above the 1,900 level for the time being although some investors chose to take profits and leave the market, and there is also the possibility of a further breakthrough. At the top, we can continue to pay attention to whether can break through the USD2,000 again. If it breaks through, it will continue to hit new highs. The bottom support will fall around 1,861 and 1870 in turn, and the deeper support will be around the 1,800 - 1,809 area. 

We conform to the bullish pattern of the market, and there will be a relative advantage for current trading plan that maintains a long position at the bottom. And there is a relatively good position to do long callbacks between 1,860 and 1,870, because this position was where the force was upward at that time. More conservative investors can also pay attention to whether there is a callback between 1,800 and 1,809 to do long. However, the chance of this point appearing is relatively low. In addition, we need to pay attention to whether the strength of the correction of gold. We think that it is a good opportunity to go long as long as it does not drop below 1,800 - 1,809.

Hugo Leong

Gold Analyst of Hantec Group