Gold Price Surges as Market Sentiment Turns Risk-Averse Ahead of Key Central Bank Meetings
The gold price continued to build on its gains from last Friday as the new week kicked off with a wave of risk aversion gripping the markets, driven by anticipation of central bank meetings scheduled for this week.
China’s property sector woes persist, with Country Garden now seeking to renegotiate its debt obligations for CNY bonds, with a looming coupon payment due on its USD note today.
The Evergrande saga continues to unravel, with Chinese authorities detaining certain personnel from the wealth management unit over the weekend.
As a consequence, Chinese companies listed in Hong Kong experienced declines, with the Hang Seng Index (HSI) plunging by over 1% today. Australia’s S&P ASX 200 also saw a decline, albeit to a lesser extent.
Japan is observing a public holiday today, resulting in the closure of the cash market. However, Nikkei 225 futures have seen an upward shift, accompanied by the Yen’s persistent trading at levels near its lowest point since November of the previous year, just shy of 148.
Other currencies have exhibited a relatively subdued start to the week, following the US Dollar’s gains last week against the Swiss Franc (CHF), Euro (EUR), British Pound (GBP), and Japanese Yen (JPY).
Futures markets are indicating a stable opening for the Wall Street cash session.
Across the Asia-Pacific (APAC) region, bond prices are generally declining as yields edge higher. The benchmark 10-year Treasury bond concluded the previous week at 4.33%, after reaching a 16-year high of 4.36% on Thursday.
Crude oil prices are hovering near the 10-month peak observed last Friday, with the WTI futures contract close to US$ 91.50 per barrel, while the Brent contract is trading around US$ 94.50 per barrel.
Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled to speak at the 24th World Petroleum Congress in Canada later today.
Numerous central banks are set to convene this week to make decisions regarding monetary policy. The Federal Reserve and the Bank of Japan are both expected to maintain their current policies on Wednesday and Friday, respectively.
Market sentiment is pricing in a 25 basis point rate hike by the Bank of England on Wednesday.
Spot gold has exhibited a trading range of US$ 1,885 to US$ 1,997 over the past four months.
A decisive move in either direction could serve as the catalyst for a significant shift in momentum. Click the banner below to delve into range trading strategies.
Potential support levels lie in the 1885 to 1895 range, where a series of previous lows, a significant breakpoint, and the 38.2% Fibonacci Retracement level from the move between 1614 and 2062 can be found.
Further down, the 50% Fibonacci Retracement at 1838 may offer additional support.
On the upside, resistance could be encountered at recent peaks of 1953 and 1987, or at the psychologically significant level of 2000, where an associated breakpoint is situated nearby.