The dollar is in power again! Gold is under pressure and falling, and uncertainty remains a support

International spot gold fell slightly under pressure on Tuesday (February 21). The lowest intraday price in the US market fell to $1225.73/ounce, but the bulls still rose strongly in the short term, and the price of gold was still supported by bargain buying. On Tuesday, with the Federal Reserve's expectation of raising interest rates next month approaching, the strong rise of the US dollar was boosted and put pressure on gold, but the political and economic uncertainty in Europe and the United States continued to support gold. The preliminary values of the US Markit service industry and manufacturing PMI in February fell less than expected. Markit Chief Economist Williamson believes that the decline in PMI data indicates that the upward trend since the US election has slowed down. The data had a short-term impact on the rise of the US dollar. Gold was put under pressure on Tuesday by Minneapolis Federal Reserve President Paul Kashkari, who was on the FOMC in 2017, saying the Fed would shrink its balance sheet in the near future if the economy was strong enough and watching for signs of overheating in the labour market.
The dollar rallied strongly on Tuesday, with the U.S. dollar index up 0.6% at 101.52 as of press time. U.S. stocks rose on Tuesday, with the Dow up 0.33% at 20,691.70; the S & P 500 up 0.51% at 2363.20; the Nasdaq rose 0.35% at 5,858.74. Crude oil rose on Tuesday, with the U.S. oil index up 1.77% at $54.73 a barrel; the Brent oil index rose 1.41% at $56.97 a barrel.
Analysts said that gold is currently subject to the possible tightening of US monetary policy at some stage. The possibility of March is relatively large, but many political and economic uncertainties still support gold. Gold's safe-haven demand is still favored by investors, especially in the case of US stocks hitting new highs every day and risks accumulating. Gold is still an effective tool for hedging risks. Investment demand for gold can be reflected in the position of the world's largest gold ETF, SPDR, which has increased by 5% to 2704.4 million ounces since January 31. This week, Federal Reserve officials are making a busy appearance, and their remarks will be one of the factors that will dominate the market. In addition, US President Donald Trump will speak to Congress at the end of February, and analysts and traders hope to see more details on infrastructure spending and tax cuts. From a technical point of view, the technical support level for gold is near the 21-day moving average, that is, at $1221/oz, with $1250/oz being the main obstacle; an upward breakout will encounter Fibonacci resistance at $1255/oz. If the price of gold can stabilize above $1221/oz, the possibility of a sharp decline is not very high.
The preliminary value of the Markit services PMI in the United States fell to 53.9 in February, lower than the estimate and the final value of the previous month
On Tuesday (February 21), an industry report released by financial data company Markit showed that the initial value of the U.S. service sector purchasing managers' index (PMI) in February was lower than expected and the final value of the previous month.
The data shows that the initial value of the MARKIT Service Purchasing Managers Index (PMI) in the United States in February was 53.9, the estimate was 55.8, and the final value in January was 55.6.
50 is a watershed that marks the contraction or growth of the industry.
The preliminary value of the MARKIT service industry new business sub-index in the United States in February was 53.3, the lowest since September, and the final value in January was 56.0.
The initial value of the MARKIT comprehensive PMI in the United States in February was 54.3, and the final value in January was 55.8.
The initial value of the MARKIT composite new orders sub-index in the United States in February was 53.9, and the final value in January was 56.3.
Markit chief economist Williamson commented that the decline in PMI data indicates that the upward trend since the US election has slowed; business output growth, new orders and employment have declined across the board, while inflation has been subdued.
The preliminary value of the Markit services PMI in the United States fell to 53.9 in February, lower than the estimate and the final value of the previous month
On Tuesday (February 21), an industry report released by financial data company Markit showed that the initial value of the U.S. service sector purchasing managers' index (PMI) in February was lower than expected and the final value of the previous month.
The data shows that the initial value of the MARKIT Service Purchasing Managers Index (PMI) in the United States in February was 53.9, the estimate was 55.8, and the final value in January was 55.6.
50 is a watershed that marks the contraction or growth of the industry.
The preliminary value of the MARKIT service industry new business sub-index in the United States in February was 53.3, the lowest since September, and the final value in January was 56.0.
The initial value of the MARKIT comprehensive PMI in the United States in February was 54.3, and the final value in January was 55.8.
The initial value of the MARKIT composite new orders sub-index in the United States in February was 53.9, and the final value in January was 56.3.
Markit chief economist Williamson commented that the decline in PMI data indicates that the upward trend since the US election has slowed; business output growth, new orders and employment have declined across the board, while inflation has been subdued.
Outlook
"Gold is subject to a possible tightening of US monetary policy at some stage, and March is more likely," said Robin Bhar, analyst at Socie ́ te ́ Ge ́ ne ́ rale. "There is a lot of political uncertainty and there is still money flowing into gold due to safe haven demand."
Gold is also a hedge against an overvalued stock market, Bhar added.
Edward Meir, analyst at INTLFCStone, said: "It's really impressive that gold has kept rallying in the face of record highs for US stocks. The dollar is also quite strong." He believes gold has been supported by various political and economic uncertainties in 2017.
At 00:39 Beijing time, spot gold was quoted at $1237.21 per ounce, down $0.70 or 0.06%.