12.19 Initial Analysis of Gold Trading Strategy
Today at 10:00, Japan's interest rate hike took effect. As the Bank of Japan raised interest rates, the yield on Japanese domestic bonds began to rise, meaning that Japanese money does not need to risk exchange rate fluctuations to purchase US Treasuries, but instead opts to sell US Treasuries and redirect funds back to Japan to buy domestic bonds. The selling of US Treasuries led to a decline in their prices, resulting in an increase in US Treasury yields; the rise in US Treasury yields indicates a higher global cost of borrowing in dollars.
Yesterday, the release of US CPI data provided positive support, causing international gold prices to surge to the 4375 level, just 7 away from the historical high of 4382, ultimately failing to break through. This confirms our previous judgment that the 4350-4380 area constitutes a strong resistance zone, with short-term signals of a peak in gold prices emerging.
From a technical perspective, the four-hour candlestick chart for gold formed an inverted hammer-like pattern with a long upper shadow, which is a typical evening star top signal, indicating that selling pressure is continuously increasing; the hourly chart recorded a bearish engulfing pattern, where the bearish candle's body completely covers the previous bullish candle's body, clarifying a short-term downward trend. The lower target level can focus on the previously indicated support at the 4260 level.
Recommendation:
Gold in the Asian session can be bought around 4300-4310, with a stop loss at 4290 and a target towards 4350, aiming for a breakthrough at 4370!
