A level of alert! Today's three major events opened the "Super Week" gold welcome riot
This week is the "World Cup" of the trading market. Today's three major events are about to kick off the "Super Week": the US-North Korea summit, the US CPI, and the United Kingdom will submit a Brexit bill to the House of Commons! Less than 1 hour left before the start of the US-North Korea summit, the market is in an alert mode!
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On Tuesday (June 12) in Asian trading hours, spot gold continued to trade near the $1300/oz mark and is currently trading above the 20-day moving average. The trend is waiting for the catalyst.
Although Trump ignited the trade war again after the G7 summit, the market reacted coldly to the heavy and intensive events this week, and the price of gold rose slightly on Monday, showing a “V”. Type reversal, eventually reluctantly closed at around 1300. Up to now, gold has gone up 1300 times on five occasions, but there is not enough action on it, and the three major "landmines" in the day are afraid of triggering gold!
(Gold 30 minutes chart Source: FX168 Financial Network)
The previous market review
After the Trump G7 Summit, it put a "mouth gun" again
The G7 meeting that ended on weekends failed to ease the trade disputes. After that, Trump continued to “burn the flames” and issued a tweet to rebuke Canada and Europe.
Last week, U.S. President Trump launched a series of tweets on Monday to vent his anger against NATO’s allies, the EU and Canadian Prime Minister Trudeau.
Trump will first point at Trudeau! A tweet was issued on Monday, saying that if fair trade cannot achieve fairness on both sides, it would be foolish trade. Immediately afterwards, Trump turned his attention to the EU and said "We have protected Europe, but we have suffered huge financial losses, and then we have been hit by unfair trades. The change is coming soon!"
Gold was once influenced by this remark and stood above the $1300 level, but then quickly fell back, as traders turned their attention to this week's super event.
"Before this week's numerous risk events, the market was quiet and completely ignored Trump's performance at the G7 Summit," said Stephen Innes, OANDA Asia Pacific Trading Director, adding that as the geopolitical risks ease, the Fed and the European Central Bank will The short-term fate of gold prices.
Analysts pointed out that the foreign exchange market reaction is quite flat, reflecting that the market originally had low expectations for the G7 summit.
“The threat of a global trade war is still very real, but this week's global exchange rate volatility will be driven by a series of other major events,” said Viraj Patel, ING currency strategist.
Nowadays! Three "landmines" hit the market
As we all know, this week the market "land mines are everywhere", the big market is imminent, and today's three major events are officially opened the curtain of "Super Week"!
The U.S.-North Korea summit will start with guns!
North Korea’s top leader Kim Jong-un and US President Trump will meet today (June 12) at the Capella Hotel in Singapore’s Sentosa Island. This is the first meeting between the incumbent leaders of the DPRK and the United States in history. The specific meeting time will be set at 9:00 am local time on June 12 in Singapore.
According to foreign media reports, both delegations have already gone to the summit and are currently less than one hour away from the official start of the summit.
(Source: Bloomberg, FX168 Financial Network)
Trump said on Monday that the results of his historic meeting with the North Korean leader may be "very good." Officials of the two countries seek to reduce their differences in how to end the nuclear checkup on the Korean Peninsula.
U.S. Secretary of State Pompeo said in a media briefing last day that the dialogue with North Korea has progressed rapidly. Any claim that the U.S. lacks technical expertise in the U.S. talks is a misunderstanding. President Trump believes that Kim Jong Il, the top leader of North Korea, has unprecedented possibilities. opportunity.
However, Pompeo also said that the ultimate goal of North Korea has not changed, the talks will reach conclusions faster than expected, and the United States hopes that the summit will lay the foundation for future constructive talks. The United States will help the DPRK to invest if North Korea goes in the right direction! Before North Korea goes nuclear, sanctions will continue. There is still much work to be done. Many details still need to be finalized. President Trump has made it clear that he will not provide financial assistance until the outcome of the meeting we hope for.
According to Bloomberg, this is a severe message sent to North Korea by U.S. Secretary of State Pompeo. Pompeo said that the complete, verifiable, and irreversible denuclearization "is the only acceptable outcome of the United States" and "will increase sanctions if diplomacy cannot move in the right direction."
The differences between the United States and North Korea on how to achieve the denuclearization of the peninsula are the main obstacles that the two countries need to overcome. The U.S. asked the DPRK to abandon the nuclear program "completely, verifiable, and irreversible" before the U.S. side lifts sanctions against the DPRK. The DPRK maintains that the U.S. is to achieve denuclearization through "phased, simultaneous measures."
Analysts pointed out that the DPRK and U.S. leaders’ meeting has been pushed forward after several twists and turns, indicating that both parties hope to resolve the DPRK nuclear issue peacefully through dialogue. However, given the low mutual trust between the DPRK and the United States, it is difficult to solve all problems with a single leader meeting. There is still a long way to go before the peninsula moves towards real peace.
According to Jameel Ahmad, Global Head of Currency Strategy and Market Research at FXTM, in an article published on Monday, although the meetings between the leaders of countries are generally not regarded as major market events and the market response is generally small, the US-North Korea summit is quite different. A historic meeting between an unpredictable American president and a national leader who has been completely isolated and nuclear-capable for decades is a big event that investors cannot ignore.
Ahmad believes that if the summit achieves positive results, the yen and gold will suffer. However, if the summit does not proceed smoothly, investors may enter the “safe-haven” mode. In the event that risk appetite subsides, market uncertainty poses a major disadvantage to global stock markets and will also jointly strike against emerging market currencies.
Tsutomu Nakamura, strategist at Ueda Harlow, said that current market participants are taking a wait-and-see approach before the US-North Korea summit on Tuesday; if the US-North Korea conference seems to end with failure, the market is expected to make a strong response and risk aversion will heat up.
The progress of the US-North Korea summit will affect the market nerves. This will be a historic day. If a certain agreement is reached at the summit, it will affect market sentiment and the future political situation. However, if there are no positive developments in the “Special Fair” or even if the two parties are not happy, concerns about the geopolitical situation will intensify, which is expected to provide support for the gold price.
Britain's Brexit vote: political risk raid?
In addition to the US-North Korea summit, there is another big event today: Britain will submit a Brexitment Act to the lower house! The voting for the Brexit plan is crucial, as market participants assess Prime Minister Teresa May’s leadership and the possibility of early elections.
At present, the congressmen are divided into two camps. One group hopes that the United Kingdom and the European Union will make a complete break, and the other wants the United Kingdom to establish a close relationship with the European Union after leaving the EU in March next year.
According to Bloomberg’s report last week, the main opposition party in the United Kingdom proposed a plan for the United Kingdom to actually remain in the EU single market, which may prompt the country to maintain closer ties with the European Union after Brexit.
In a 12-hour marathon debate, Teresa will ask lawmakers to support her views on Brexit. She cannot afford a lesser degree of opposition because she cannot automatically get a majority seat in the House of Commons.
If Teresa May is defeated, the risk of Britain’s early elections will increase, which will confuse the British Brexit process and may give birth to the Labour government. If May is forced to change the way of dealing with the Brexit problem and maintain a closer relationship with the EU, its prime minister is likely to face the challenge of the supporters of the party's internal liberation.
"Italian recent experience shows that political risk may suddenly reappear," HSBC economist Simon Wells said in a report, "The British retired theme may once again warm up."
US CPI: Or influence the Fed's argument?
Tonight the market will usher in a hefty amount of data - the United States CPI, this data was announced before the Federal Reserve resolution on Wednesday, may have a certain impact on interest rate expectations.
In April of this year, the most important core CPI rose by 2.1% year-on-year, slightly lower than expected, leaving the dollar bulls disappointed. Following the recovery in April, the renewed stagnation of the CPI's rise led to the Fed’s favorite indicator, the core PCE, remaining below 2%.
The current market expects that the year-on-year CPI increase in May will show that the overall and core inflation rate is further above 2%. If this is the case, the Fed will further tolerate it, and the market is waiting for this.
Analysts pointed out that any sign of accelerated inflation may boost the dollar, and repeated or economic slowdown may put the dollar under pressure.
Market expectations on Wednesday, the Fed may be the first time in 10 years to raise the target interest rate higher than the inflation level, seeking to maintain the second longest US economic growth, while continuing to keep on the path of raising interest rates. Rising interest rates weaken the attractiveness of non-negotiable assets such as gold.
However, Walter Pehowich, executive vice president of investment services at Dillon Gage Metals, said: “With the geopolitical risks in North Korea and the Fed raising interest rates to be digested by the market, there is really no downside for gold. Unless things make the market unexpected, gold prices can only rise.”
Gold riots are approaching!
FXStreet analysts pointed out that gold continues to oscillate around the 1300 mark, suggesting that the market is hesitant, but Bollinger Bands hints that the gold price will usher in "significant changes."
In the 4 hours chart, the Bollinger Bands's gap between the upper and lower tracks was $2.24, the narrowest level in 2018, suggesting that speculative interest was weak. In spite of this, the big gold movement may soon come, the longer the consolidation lasts, the narrower the trading range, the more violent the breakthrough will be.
(Gold 4 hours chart Source: FXStreet, FX168 Financial Network)
Gold has been traded near the threshold of 1300 US dollars since mid-May. The Bollinger Bands channel has been narrowing since June 5, and the breakthrough (swell/plunge) is approaching.
In a report released on Monday (June 11), Fu Stone International stated that after the two-day US Federal Open Market Committee meeting is over, the gold price trend may rebound.
Samuel Laughlin, head of precious metals trading and sales at MKS (Switzerland), said in a report released on Monday (June 11) that with a series of potential market events, gold and other precious metals may be in a turbulent week. .
Proofreading: TIER
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