The Fed continues to raise interest rates Supporting gold above $1,800

December gold prices move within the range. 1,764.90-1,824.37 dollars per ounce Increased 2.57% or 45.45 dollars per ounce from the previous month. It tends to close the market in positive territory for the past month. Starting from the first day of the month Gold prices rose to close at $1802.20 an ounce, up about $34.70 an ounce. from the previous day Responding to the statement of Jerome Powell, Chairman of the Federal Reserve (Fed), that he may be able to delay the increase in interest rates as soon as possible in this December meeting.

Even though the price of gold fluctuates up and down after that. But it rose until testing the level of 1,824.37 dollars per ounce on December 13, or the day before the December meeting. of the Fed, which the price is the highest in more than 5 months

However, the Fed meeting on December 14 US time has announced an interest rate increase of 0.5%, even though the increase will be at a recession rate as many have predicted. But the Fed's statement continued to signal that it would continue to raise interest rates. Until inflation returns to the target range of 2%, which this attitude As a result, the dollar strengthens. And it has become an important factor that pushes the price of gold down after reaching its highest price as mentioned above. before rebounding to break through the level of $1,800 per ounce again. After adjusting the monetary policy of the Bank of Japan

Gold market fundamentals that occurred in December

The price of gold fluctuates up and down throughout the period considered. But the overall picture is likely to continue closing positive from last month. This is the main factor supporting gold prices in December. They are as follows:

1. Expectations of a slowdown in the Fed's interest rate hikes have emerged following the release of better-than-expected economic figures, coupled with the expectation that global average inflation has already peaked in the past quarter. This aligns with Bloomberg Economics' estimates that global average inflation was 9.8% year-on-year in the third quarter and is projected to reach 9.5% by the end of the fourth quarter, before declining to 5.3% by the end of 2023. This suggests that the severity of inflation in the United States may decrease further in the near future.

2. Market concerns about a potential recession in 2023 stem from the aggressive interest rate hikes by central banks such as those in the US and the European Union. This is another factor supporting expectations that the Fed may ease its monetary policy. Furthermore, it has driven demand for gold as a safe-haven asset.

3. China's easing of COVID-19 restrictions, following a period of zero COVID cases, sparked public dissatisfaction and protests across the country. While this easing of measures helped alleviate domestic tensions, it also had a positive impact on the yuan and the Chinese economy.

4. The Bank of Japan (BOJ) announced a revised range for its 10-year government bond yield, from a range of -25% to +0.25% to a range of -0.5% to +0.5%. This marks a tightening of the BOJ's monetary policy, in line with actions by central banks worldwide. Following this announcement, stock market indices in the region fell, and the US dollar weakened.

However, even though on Dec. 14 the Fed raised interest rates by 0.5%, the figure is deteriorating. After increasing the figure by 0.75% in 4 times in the meetings in June, July, September. and November, but a statement from Mr. Jerome Powell, Governor of the US Federal Reserve or the Fed, has indicated that interest rates will continue to be increased. to bring inflation to the level of 2%

This sends a promise that the Fed will continue to maintain strict monetary policy. and will not rush to adjust operations prematurely Contrary to market expectations who are of the view that the Fed will tend to delay raising interest rates After inflation figures in the United States have slowed down in the past month.

Federal Reserve officials' forecast released before the meeting showed interest rates could peak at 5.1% in 2023, up 0.5 percentage points from the previous forecast of 4.6% in September. . But it will decrease to 4.1% in 2024 from the direction of the said interest rate adjustment. This is an important factor in pushing prices down. after testing the highest level in more than five months at $5 an ounce. The day before the Fed meeting

After the said announcement As a result, the dollar index strengthened. Putting pressure on the price of gold on December 15, closing down at 30.50 dollars per ounce. came to a level of 1,775.50 dollars per ounce.

In addition to the Fed's statement Factors supporting the upward direction of interest rates also put pressure on gold prices this month, such as the recovery of the US manufacturing and service sectors. According to the ISM's release, the service sector index in November rose to 56.5 from 54.4 in October, higher than expected at 53.1, while US factory orders also adjusted. The 1% increase in October was higher than the September increase of 0.3% and above expectations of 0.7%.

The increase in this number reflects the economic recovery. Therefore, it promotes the direction of the Fed's strict policy. Therefore, after the numbers were revealed Gold prices closed down to $29.75 an ounce. from the closing price of the previous day

January recommended follow

1. US job openings: Currently, the job opening rate per unemployed person is 1.7, meaning that demand for jobs exceeds the number of unemployed, keeping the US labor market tight. Therefore, the US Job Openings (JOLTS) figure, to be released on January 4, 2023, will affect the direction of the Federal Reserve's (Fed) policy. A decline in the figure could imply a slowdown in wage growth. The Fed's expectation is that job demand will return to a level that is appropriate for the existing labor supply.

2. US Unemployment Rate: Although the Fed expects a more relaxed labor market, this must be accompanied by an appropriate unemployment rate to avoid a severe recession. The ideal unemployment rate is estimated at around 4-5%, while a Bloomberg poll of economists predicts the unemployment rate could be around 4.6% by the end of 2023.

The United States will release unemployment figures on January 6, which will reflect the direction of the labor market in the United States. and may have an effect on the Fed's policy actions in early 2023.

3. US Inflation Figures: This is a key economic data point and indicator of the direction of US interest rates. At its most recent meeting on December 14th, the Fed raised interest rates again, but at a slower rate of 0.5%, after four consecutive increases of 0.75%. This slower rate hike may be due to the lower-than-expected US inflation figures for November.

Therefore, if economic figures indicate the level of inflation, such as the basic personal consumption index. Consumer Price Index and producer price index is at a slower level It may also result in the direction of the Fed's monetary policy being relaxed. The December Consumer Price Index and Producer Price Index figures will be released on Jan. 12 and Jan. 18, respectively, while the December Personal Basic Consumption Index figures will be released on Jan. 27 and Jan. XNUMX, respectively. C. will be revealed on January XNUMXth.

4. The Federal Open Market Committee (FOMC) meeting minutes for December will reflect the Fed's views on the economic situation, as well as key issues they are closely monitoring. This information will have implications for the Fed's policy direction in early 2023 and may even provide signals about the next interest rate adjustment.

5. The COVID-19 Situation in China: In December, China eased its COVID-19 restrictions domestically, positively impacting the Chinese economy and its trading partners, and contributing to global economic support in 2023. However, this easing of measures led to a reopening of the country, which could be a factor in maintaining high inflation or only slightly slowing it down. Nevertheless, the surge in infection numbers shortly after the easing of restrictions means the COVID-19 situation in China remains uncertain, and its direction needs to be closely monitored.

6. The Bank of Japan's stance: Following its expansion of the 10-year government bond yield range, many analysts speculate that this may signal an end to its ultra-loose monetary policy. However, in a statement, Bank of Japan Governor Haruhiko Kuroda explained that this policy adjustment aims to improve market mechanisms and that it is too early to discuss withdrawing ultra-loose monetary policy. Therefore, the market will need to closely monitor the Bank of Japan's next meeting to see its perspective on the financial markets and its future monetary policy direction.

Forecast gold price trends in December

In terms of technical factors perspective Gold prices rose in December to new highs. Higher than the November high. which reached the highest level in more than 5 months, around 1,824 dollars per ounce. Although the gold price trend will be positive in the medium term, But because the price has risen quite a lot and is the highest level in almost 5 months, it may cause selling pressure to come out again.

Recommended for short-term investment By buying when the price drops. The support is estimated at 1,776 dollars per ounce. And the next support is around 1,734 dollars per ounce. and sell to make a profit when the price rebounds or if the gold price rises and cannot stand above the resistance level strongly Recommend to reduce the risk of your investment portfolio. They will take profits if the price does not rebound past the resistance level of 1,852 dollars per ounce. to wait to buy back in the support area But if it passes, the next resistance level is estimated at 1,880 dollars per ounce.