For the gold price, $2,000 is proving solid resistance. However, it’s only a matter of time before the precious metal hits record highs again, according to a fund manager. ING economists, on the other hand, foresee a short-term decline in prices, while they expect gold to strengthen in the second half of the year.
Gold price could rise to all-time high soon
Eric Strand, director of AuAg ESG Gold Mining UCITS ETC, said in a private statement that he has only seen headwinds for the gold market as the global banking crisis and the threat of a recession have forced the Federal Reserve not to raise interest rates any further. In this context, Strand makes the following statement:
Even if the gold market has to wait a bit, it will soon make a move to its all-time high. Interest rates are already showing signs of ‘high for a very long time’ and causality in the banking, PE, VC and real estate sectors is now evident.
These need to be positive for gold
The comments came as gold prices held a solid support above $1,950. Gold price continued its upward trend as markets expected the Federal Reserve to cut interest rates in early June. The market is pricing in the possibility of four rate cuts by the end of the year. This contradicts comments from central bank governor Jerome Powell, who say he expects to hold interest rates steady for the remainder of 2023.
Eric Strand also points out that the contraction in monetary policy between the Federal Reserve and the European Central Bank should also be positive for gold. Although the Fed is expected to end the tightening cycle, the ECB has only just begun. Strand points out that ECB rate hikes should support the euro and weaken the US dollar. With gold prices expected to hit record highs, Strand says this could be an excellent opportunity for the mining industry, which has lagged behind precious metals since the beginning of the year.
Fed policy to support gold later in the year
cryptocoin.comAs you’ve followed, banking sector concerns have led to a shift towards safe-haven assets, and gold has clearly benefited from it. While economists at ING predict a short-term decline in prices, they expect the yellow metal to strengthen in the second half of the year. In this regard, economists make the following assessment:
Fed policy is likely to be the key to gold in the medium term. We anticipate a final increase of 25 basis points in May, which will leave the Fed funds range at 5-5.25%. Rate cuts will likely be the theme of the second half of 2023. We expect the Fed to cut the interest rate by 75 basis points in the fourth quarter. We also expect real yields to follow lower policy rates later in the year. This will also be supportive for the gold price.
While economists expect a decline in prices in the short term, they predict that gold prices will rise compared to the second half of 2023 and expect spot gold to reach an average of $2,000 in the fourth quarter. In assumptions about this, economists do not expect further deterioration in the banking sector and predict that the Fed will begin rate cuts later this year.
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