Gold remains supported into Jackson Hole event after US Treasury ignited ‘debasement’ trades
FUNDAMENTAL OVERVIEW
Gold surged on Wednesday after the US Treasury announced that it will at least double the size of its liquidity-support buyback operations for longer-dated Treasury securities, increasing the maximum purchase from $2 billion to at least $4 billion per operation.
US Treasury Secretary Bessent then said that part of the operation was sending a message to the market that yields do not reflect underlying fundamentals and added that the buyback could be more than $4 billion depending on conditions.
The Treasury intervention in the market had a QE-like effect by lowering long-term yields and easing financial conditions, although it’s not technically QE. The US Treasury announcement brought down real yields as inflation expectations rose faster than long-term nominal yields due to the Treasury’s intervention.
In the long-term, long-term yields are driven by monetary policy as they are just the average expected path of short-term interest rates over the life of the bond plus a term premium, but they are more sensitive to changes in economic outlook.
That’s why the focus will now shift to the Federal Reserve and Warsh's speech at the Jackson Hole Symposium next week. I was expecting it to be a non-event given Warsh's preference of not giving forward guidance and the fact that the soft NFP and CPI reports eased Fed tightening concerns. After the Treasury buyback announcement, though, the speech could actually be a market-moving event.
If Warsh doesn't lean against the easing in financial conditions, the current "debasement" trades like long precious metals, bitcoin and short US dollar will likely extend further. On the other hand, if he pushes back saying things like "recent easing in financial conditions, if sustained, could complicate the process of returning inflation to our target" or "if recent easing threatens progress toward price stability, we will not hesitate to respond appropriately" and so on, the market may interpret it as a signal for a potentially hawkish September FOMC and trigger pullbacks in the "debasement" trades.
GOLD TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that gold has broken above the key trendline around the 4,400 level following the US Treasury announcement and extended the gains above the 4,600 level. The natural target for the buyers should be the swing high around the 4,890 level. That’s where we can expect the sellers to step in with a defined risk above the level to position for a drop into the 3,885 level. The buyers, on the other hand, will look for a break higher to increase the bullish bets into the next swing high around the 5,400 level.
GOLD TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we have an upward trendline defining the bullish momentum. If we get a pullback into the trendline, we can expect the buyers to lean on it with a defined risk below it to keep pushing into new highs. The sellers, on the other hand, will want to see the price breaking below the trendline to pile in for a drop into the 3,885 level next.
GOLD TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we have another minor trendline defining the momentum on this timeframe. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break to pile in for a pullback into the next trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we have US Treasury Secretary Bessent unveiling the sanctions against Iran. Tomorrow, we get the US Consumer Confidence report. On Wednesday, we have the US PCE price index. On Thursday, we get the US Jobless Claims figures. On Friday, we conclude the week with Fed Chair Warsh’s speech at the Jackson Hole Symposium.
This article was written by Giuseppe Dellamotta at investinglive.com.提供 MainLink：Investinglive RSS Breaking News Feed
FX初心者には必須 無料のうちにGET！
