Gold prices were flat on Friday, hitting a two-week high in the previous session as bets on a more aggressive rate hike by the Federal Reserve rose after a sharp rise in US consumer prices. Analysts’ market comments and price predictions cryptocoin.com compiled for our readers.
Investors still rely on gold, according to Carlo Alberto de Casa
Spot gold is little changed at $1,826.40 but is poised for a weekly gain of around 1%. U.S. gold futures fell 0.5% to $1,827.70. Soni Kumari, commodity strategist at ANZ, comments:
Stronger-than-expected inflation raises the risk of faster rate hikes. The gold market reacted to this and the dollar strengthened.
Pressure is mounting on the Fed to take a stronger stance on inflation after an unexpectedly large jump in US consumer prices bolstered the central bank’s view that it is behind the curve.
Expectations of a tight Fed response next month pushed the dollar higher and plunged global equities, pushing the benchmark 10-year U.S. Treasury bonds higher on Thursday. Carlo Alberto de Casa, market analyst at Kinesis, comments:
From a technical standpoint, it is trying to cross the $1,835 threshold. The first major support zone is represented by the $1,800 mark. Investors still rely on gold. Because gold represents a hedge against the possibility that central banks cannot control inflation.
Giovanni Staunovo: This supports the gold price
“A rising interest rate environment comes right after the gold market,” commented David Meger, director of metals trading at High Ridge Futures.
However, a confirmation of the ongoing inflationary trend that we believe is the key driver underlying gold’s recent move is the flip side of the coin.
The dollar (DXY) slumped to a one-week low, making bullion cheaper for holders of other currencies. While gold is considered a hedge against rising inflation, a rise in interest rates increases the opportunity cost of holding non-yielding bullion. UBS analyst Giovanni Staunovo comments:
I think market participants are pricing in six rate hikes this year. There is some concern that this may affect economic growth, which in turn supports the gold price.
Pablo Piovano: Gold remains supported around $1,800
Open interest on gold futures markets rose for the fourth consecutive session on Thursday, this time up by around 10.3k contracts, given improved figures from CME Group. Along the same lines, volume remained volatile and rose markedly to around 102.5k contracts.
Gold prices reversed the rally, reaching new 2-week highs of $1,840 and ended the session on the defensive on Thursday, according to market analyst Pablo Piovano. The analyst states that the choppy session is behind the increased open interest and volume supporting further corrections in the very near term, emphasizing that the critical $1,800 mark remains a solid area of contention for now.
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