#Basic logic behind bearish predictions:

📉 1. The residual effect of the Federal Reserve’s hawkish decision and the continued pressure from interest rate hike expectations (main negative factors)
Yesterday’s hawkish decision subverted interest rate cut expectations. The probability of a rate cut in September is only 19%, and there will be only one rate cut this year (December). High interest rates are now a given, making it expensive to hold gold, making zero-coupon assets less attractive and leading to continued capital outflows.

Real interest rates remained at a high of 1.98%, their highest level in two months. Historical data shows that when the real interest rate exceeds 1.8%, gold is more likely to fall than to rise, and the room for growth is limited, which is quite consistent with the current pattern.

Powell’s hawkish stance showed no signs of weakening, leading the market to reassess expectations for rate hikes. The U.S. dollar and U.S. Treasury bonds remain strong at high levels, which continues to put pressure on gold prices.

2. The U.S. dollar index fluctuates at a high level, and price pressure and hedging demand continue to shift (strong negative factors).

The U.S. dollar index remains at a high of 99.5. The U.S. dollar became the world’s preferred safe-haven currency following tight monetary policy decisions, shifting demand away from gold and weakening its appeal as a safe-haven currency.

Non-US currencies are under overall pressure. The euro, pound and yen remained lower against the dollar. Gold priced in US dollars is facing negative pressure, losing its price advantage and lacking buying support.

The dollar’s strength cycle is not over yet, and a sharp correction is unlikely in the short term. This will continue to inhibit gold’s recovery, making it difficult to break through the strong resistance level of 4620.

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