#Basic logic behind pessimistic predictions:

📉 1. Yesterday’s difficult decision subverted the expectations of a reduction in capital interest rates. The probability of a rate cut in September has dropped to just 19%, with only one rate cut expected this year (December). High interest rates are inevitable, which keeps the cost of holding gold high, reduces the attractiveness of zero-interest assets, and leads to continued capital outflows.

Real interest rates remained at a high of 1.99%, their highest level in two months. Historical data shows that when the real interest rate exceeds 1.8%, gold tends to fall more than it rises, and the room for growth is limited, which is consistent with the current pattern.

Powell’s hawkish stance shows no signs of abating, exacerbating divisions within the Fed. The market is reassessing expectations for interest rate hikes, keeping the dollar and U.S. Treasuries strong at high levels and putting continued pressure on gold.

💵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 remained at a high of 99.48. Following the hawkish decision, the U.S. dollar became the world’s preferred safe-haven currency, shifting demand away from gold and weakening its appeal as a safe-haven currency.

Non-U.S. currencies were generally under pressure, with the euro, pound, and yen continuing to fall against the U.S. 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 the recovery of gold prices, which are unlikely to break through the strong resistance level of 4,600.

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