3 Master Names Discussed Gold Prices: Here are the Results!

Gold investors continue to weigh developments in Russia-Ukraine and the Federal Reserve’s next moves to help curb inflation. After rebounding on Monday after losing last week, the yellow metal is slightly lower today, hovering around $1,925.

The effect of developments in Ukraine on gold prices

Commenting on the developments in the market, Insignia Consultants research director Chintan Karnani makes the following assessment:

Traders are trying to assess the economic impact of Ukraine in the second quarter and subsequent quarters. Hyperinflation and the possibility of stagflation are the reason why gold prices are trading above $1,900.

Chintan Karnani states that unless Russia comes close to triggering the nuclear option, the Ukraine war is unlikely to have a significant impact on global financial markets. The analyst says the following about the impact of developments on gold prices:

It is Putin’s fear of exercising the nuclear option that has caused an immediate buy strategy among gold traders worldwide. They also believe that gold prices will collapse or fall if news comes in that the Russian central bank is selling gold to meet its domestic needs.

Fawad Razaqzada: We can see 50 basis points increase in May

cryptocoin.com As we reported, gold prices traded lower on Tuesday after Federal Reserve Chairman Jerome Powell said inflation was ‘too high’ and left the door open for more than 25 basis points hikes this year.

Gold

Following Powell’s comments, ThinkMarkets market analyst Fawad Razaqzada comments, “The main indices fell sharply as the dollar found support and gold fell from its previous highs as interest rates rose”. The analyst explains the Fed’s stance as follows:

The appetite to fight inflation is much stronger, pointing to six rate hikes in 2022. But judging by the latest statements from Powell and some Fed officials, there’s a good chance we’ll see a 50 basis point increase in May.

Last week, the Fed posted a widely expected quarter-point gain, signaling that it expects such increases to total 10 to 11 percent by the end of 2023. Also, some Fed officials have argued for the possibility of raising rates by half a point in the future.

Gold

Atlanta Fed President Raphael Bostic said on Monday that the goal of Fed monetary policy is to get the policy rate back to neutral as quickly as possible. This year sees a total of six quarter-point gains and two more to approach neutral in 2024.

“Gold investment demand is reviving”

While the geopolitical risk premium of gold eased after peace talks between Russia and Ukraine, expectations for a stronger dollar and a more aggressive rate hike cycle also weighed on sentiment. Strategists at ANZ expect the yellow metal to offset aggressive tightening expectations amid safe-haven demand amid the protracted Ukraine conflict. Analysts highlight the following points:

The Fed increased interest rates by 25 basis points at its meeting last week. The dot chart showed that the median for the next two years exceeded the long-term forecasts. While an aggressive cycle of rate hikes remains a key headwind, this is offset by strong safe-haven demand amid the uncertainty created by the ongoing war in Ukraine.

XAU

Investment demand has seen strong inflows since February, with ETF net flows rising to 202 tonnes to date. This comes after a net liquidation of 300 tonnes in 2021. Investors also added 233 tons of net long gold positions in futures. Analysts’ assessment is as follows:

Demand for physical gold in India and China may be impacted by expectations of higher gold prices and slower economic growth. The falling gold spot premium in India and China indicates weaker physical buying.

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