Gold prices soared to a record high above $5,500 per ounce, continuing the rapid rally driven by the weakening of the US dollar and investors’ selling of sovereign bonds and currencies.
Gold prices rose by as much as 3.2%, extending the 4.6% gain from the previous trading day – the biggest one-day increase since the peak of the COVID-19 pandemic in March 2020. This year, the prices of precious metals have risen sharply due to escalating geopolitical tensions and concerns over the independence of the Federal Reserve, which have also supported the depreciation trade. Silver prices also hit a record high on Thursday.
Traders have not looked beyond the expectation that the Federal Reserve will keep interest rates unchanged on Wednesday. With a new monetary policy leader expected to replace Jerome Powell later this year, BlackRock’s Rick Rieder, an analyst who advocates for more aggressive rate cuts, has emerged as a favorite. Traders are stepping up their bets on a dovish Fed policy, which would be beneficial for non-yielding precious metals.
Bart Melek, global head of commodities strategy at TD Securities, said, “People’s attention has moved beyond Powell, believing that the next Fed chair might be more dovish. The choice of the Fed chair will be a key factor in determining the gold price trend this year.”
Last week, the Japanese bond market witnessed a large-scale sell-off, once again confirming market concerns over huge fiscal spending. Meanwhile, market speculation that the US might intervene to support the yen put pressure on the dollar and made precious metal prices more affordable for most buyers. As investors flocked to the gold market, the price of gold has soared by more than 25% so far this year. The increase in silver prices was even more significant, approaching 65%.
US President Donald Trump said this week that he was not worried about the dollar’s decline, which has fallen to its lowest level in nearly four years as the world’s major reserve currency. However, Treasury Secretary Steven Mnuchin later said that the government supports a strong dollar and ruled out the possibility of intervening in the market to sell dollars against the yen.
In recent weeks, a series of moves by the White House – including threats to annex Greenland and military intervention in Venezuela – have disrupted the market. On Wednesday, the US leader warned Iran that it must either reach a nuclear deal or face military strikes; recently, he also threatened to impose trade tariffs on South Korea and Canada.
In the context of ongoing geopolitical turmoil, gold and silver are the ultimate safe-haven assets against extreme risks. Gold serves as the anchor for all valuations, and whenever the price of gold rises, other precious metals will also soar.
Technical analysis:
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Gold: Under the combined influence of the new Fed chair, geopolitical crises, and the credit issue of the US dollar, gold has maintained a very strong trend, rising all the way to around 5600. Due to the high price and increased volatility, we continue to recommend keeping a low long position and being alert to the rebound signals after low liquidity. However, we also suggest keeping an eye on the new converging pattern that may emerge at the high level and give it 1-2 attempts. We advise that in a one-sided strong market, getting on board early is crucial, while controlling the position size and maintaining a solid base position. For detailed positions, please consult the plugin.
(Gold 15-minute chart)
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Nasdaq Index: Yesterday, the green buy limit position we alerted through the plugin was precisely able to capture the wick pullback, achieving a profit-to-loss ratio of more than 2:1. For today’s trading, continue to maintain the strategy of buying low and shorting after low liquidity followed by a rebound. For detailed positions, please consult the plugin.
(NASDAQ 15-minute chart)
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Crude oil: Yesterday’s price pullback, although there were some liquidation situations, did not fall below the yellow zone as alerted by our plugin. The random price returned above 64. For today, continue to maintain the rhythm of buying low or attempting a rebound after liquidation, with a focus on the 63-63.30 range for consolidation. For detailed positions, please consult the plugin.
(Crude Oil 15-Minute Chart)
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Today’s key financial data and events to focus on:
21:30 U.S. Seasonally Adjusted Initial Jobless Claims (in thousands) (to 0124)
