2 Analysts Share Their Gold Forecasts: Prepare For These Levels!

Market analyst Christopher Lewis states that gold markets have risen significantly during the week, passing through a key downtrend line, and likens Friday to a train wreck. According to analyst James Hyerczykê, until golden bulls agree on the timing of the first rate hike, they will likely buy on the dips and explore the upside potential for stop orders. Weekly gold analysis and forecasts by analysts Christopher Lewis and James Hyerczykê cryptocoin.com we have compiled for you.

“Gold markets are heavily supported at $1,700”

Analyst Christopher Lewis notes that gold markets rallied significantly over the week to break the downtrend line by breaking above the 50-week EMA, showing excessive strength by doing so, but a massive sell-off on Friday. According to the analyst, at this point, we seem to be trying to understand whether this breakout is a continuation, and it should be said that this market pays a lot of attention to 10-year rates. The analyst reminds that as the gold price rises and falls, this can have a big impact on what the next step will be in the market, and makes the following assessments:

You should also pay attention to the US dollar in which the commodity is priced. If the US dollar strengthens, it is likely to trade against the value of gold. I don’t like the idea of ​​trying to drill down into this position, but if we had moved above the $1,835 level then I would have been much more inclined to be a buyer and stay in a position. In the meantime, I suspect we’ll see a lot of turbulence in this general environment and therefore cause noisy behavior at best.

From a long-term perspective, Christopher Lewis considers the gold markets to be heavily supported at the $1,700 level, so this is their “market base” for those looking for a long-term position. The analyst continues his assessment as follows:

Although it was pretty noisy last week, at the end of the day we just hang out in the same area. I suspect there will likely be more consolidation.

Fed speakers block gold prices recovery

Gold futures jumped to the highest level since Sept. 7 on Friday and then gave back nearly half of their previous gains at the close. On the other hand, besides the positive close for the session, the market also recorded its second weekly gain in a row. Meanwhile, a weaker US dollar helped increase foreign demand for the dollar-denominated asset, as well as mounting inflationary pressure.

Key Fed speakers on Friday helped fuel volatility by making contradictory statements about inflation. Atlanta Fed President Raphael Bostic may have fanned the flames further, saying he expects high inflation to continue into 2022 and that the central bank should raise interest rates by the end of the year. In addition, gold prices gave back half of their gains after Federal Reserve Governor Jerome Powell said he expects inflation to ease next year and that the US central bank is on track to reduce stimulus.

Fed’s Raphael Bostic forecasts higher prices followed by higher interest rates in 2022

Raphael Bostic, Chairman of the Federal Reserve Bank of Atlanta, said on Thursday that supply chain disruptions and labor market restraints, combined with strong consumer demand, could keep inflation high through 2022.

Once these issues are resolved, labor markets will improve and the Fed will be able to start raising interest rates.

“It is becoming increasingly clear that this will continue into 2022,” the Atlanta Fed President said of the mounting inflation pressures. According to Raphael Bostic, part of the final answer to how long this will take will depend on how quickly the coronavirus issues are resolved alongside some supply chain challenges occurring globally. In an interview, when asked when the rate hike would be decided, Raphael Bostic made the following statements:

Demand continues to be very strong. So if supply and labor constraints can be resolved, the economy has a lot of room to grow. I’m thinking of the end of the third quarter, maybe the beginning of the fourth quarter for 2022. By then, I expect the US economy to return to full employment.

Jerome Powell says it’s time for Fed tapering, time not to raise rates

On Friday, Fed Chairman Jerome Powell said the U.S. central bank should start the process of reducing its support for the economy by reducing its asset purchases, but it doesn’t need to touch the interest rate dial just yet. The Fed Chairman said the following at an online conference:

I think it’s time for tapering. However, I don’t think it’s time to raise interest rates.

Jerome Powell noted that there are still five million fewer jobs in the US than before the coronavirus pandemic, reiterating the view that hyperinflation will decrease next year as pandemic pressures ease:

We think we can be patient and allow the labor market to recover.

Short term forecast for gold

Market analyst James Hyerczyk notes that gold traders may face increased volatility as we approach the next Federal Reserve meeting on November 2-3. According to the analyst, Friday’s price action shows that traders are waiting for clarity from the Fed on the timeline for the first rate hike. The analyst underlines the following findings:

Until the gold bulls agree on the timing of the first rate hike, they will likely buy on the dips and explore the upside potential for stop orders. We did not see evidence of investors pushing the market higher. But I believe the golden bears are selling rally, betting on tapering and an earlier-than-expected rate hike.

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