On Tuesday (July 9), spot gold hit a new low for the week, as the US dollar index hit a three-week high, Fed Chairman Powell will testify to Congress, investors are reassessing the Fed’s possible rate cut this month. However, Iran’s practice of increasing the abundance of enriched uranium has further worsened the geopolitical situation and the price of gold has been limited.

At 20:28 Beijing time, spot gold fell slightly by 0.09% to 1394.15 US dollars / ounce; COMEX gold futures contract fell 0.28% to 1396.2 US dollars / ounce; the US dollar index rose 0.12% to 97.495.

The price of gold fell by nearly 0.7% and hit a one-week low of $1,385.78 per ounce. The US dollar index hit a new high of 97.593 since June 19.

According to the “Fed Reserve Watch” tool of the Chicago Mercantile Exchange Group, the Fed will cut interest rates this month, but the probability of a 50 basis point rate cut is less than 5%, compared with 25% a week ago; the probability of a rate cut three times before the end of the year is 43%. It was as high as 60% a week ago.

CMC Markets analyst David Madden said that after the US non-farm payrolls report released last Friday (July 5) was stronger than expected, traders questioned their previous expectations that the Fed would cut interest rates “too doves.”

According to data released by the New York Fed on Monday (July 8), US consumers raised their inflation expectations for the first time in three months in June, further reducing the probability of the Fed cutting interest rates sharply.

Samson Li, a precious metals analyst at GFMS in Hong Kong, said that on the technical side, gold is now consolidating around $1,400, with a range of about $20.

Sao Paulo analyst Ole Hansen said: “The real question is not whether Powell will have a mild tone when it comes to the US economic outlook, but how gentle it is.”

The biggest risk in the market is that gold has successfully attracted a large number of new buyers in the past month. Any changes in the short-term outlook may have a negative impact on prices, and the early bulls need to take profits.

Trade disputes, the United States still has little tricks

Madden added that since the end of the G20 summit, the warming of US-China trade relations has intensified the strengthening of the US dollar. “The situation has at least not deteriorated further, and it will benefit the market itself.”

But the US government said on Monday that domestic producers were hurt by structural steel imports from countries such as Mexico and would instruct customs agencies to collect margins from such steel importers.

Mexico said in a statement that it has nothing to do with the tariff threats that US President Trump had previously offered. However, it is pointed out that the Ministry of Economic Affairs will defend the rights of those surveyed.

Iran: Enriched uranium abundance will rise to 20%

Iran threatened on Monday that it would restart the centrifuge that had been shut down and increase the enrichment of enriched uranium to 20% to reduce the implementation of the nuclear agreement. But Iran insists that it is denying the development of nuclear weapons.

The semi-official Tasnem news agency quoted Major General Hossein Salami, commander-in-chief of the Iranian Revolutionary Guard, as saying: “When the world knows that we are not developing nuclear weapons, why do they still impose global sanctions on us on the nuclear issue? It’s because we have mastered science and technology!”

Compared with the above-mentioned threats issued by the Iranian IAEA spokesperson, the country’s practice of enriching uranium stocks over the upper limit of the nuclear agreement in the past week is only a few minor incidents. But these threats will ruin the main results of the agreement aimed at preventing Iran from making nuclear weapons, and may cause serious doubts from the international community whether the agreement can continue to exist.

The United States continues to press, Europe is difficult

Although Iran threatened to increase the enrichment of enriched uranium, the United States said that the re-implementation of sanctions against Iraq is working and warned Iranian leaders not to underestimate the determination of the United States.

In a speech, US Vice President Burns warned: “Iran should not confuse US restraint with the lack of determination of the United States.” He reiterated Washington’s determination to protect American personnel and citizens in the Middle East.

The Royal Marines had previously detained a giant Iranian tanker in Gibraltar for attempting to deliver oil to Syria in violation of EU sanctions. This incident has angered Tehran and may exacerbate the confrontation between Iran and the West.

The Iranian Foreign Minister accused Britain of seizing an Iranian tanker last week as a “pirate” act. The United Kingdom said that the tanker’s destination is Syria, which violates EU sanctions against Syria.

Iranian Foreign Minister Zarif said that the world powers will not be able to negotiate a better agreement than the 2015 nuclear deal. The nuclear agreement allows Iran to respond to the US withdrawal by reducing the implementation of the agreement, and Iran will take some measures to reduce enforcement every 60 days.

According to Iran’s semi-official Tasnim news agency, Iran’s armed chief of staff, Mohammad Bagheri, said on Tuesday that the British seized Iran’s tankers near Gibraltar. “Iran will respond appropriately if necessary.”

Spot gold is expected to end the callback around $1,382

Spot gold is nearing $1382 ((iv)) wave callback, which is the 61.8% target for the upside ((iii)) wave that started from $1,266.