Gold prices are fluctuating at their highest level of the year as US dollar and Treasury yields fall after stronger-than-expected US consumer inflation data. Market evaluations and gold forecasts from master analysts cryptocoin.com compiled for our readers.
Gold will benefit greatly from developments, according to Peter Spina
Consumer prices rose 0.5% in December last year to push the cost of living increase to a nearly 40-year high of 7%, indicating that high US inflation will continue into 2022. The increase in the consumer price index beat economists’ estimate of 0.4%, surveyed by The Wall Street Journal. The data also reinforces the view that inflation is well above the Federal Reserve’s 2% annual target. Peter Spina, president and CEO of GoldSeek, comments:
The most important takeaway for gold here is that gold is a rocket ship and fuel for inflation. Gold will benefit greatly as inflation now shows itself to be incorporated into the system and inflation is increasingly recognized.
The US dollar fell against most currencies after the CPI data and US benchmark stock indices traded higher. ThinkMarkets market analyst Fawad Razaqzada points out the following in a market review:
The market seems prepared for even higher inflation, which obviously did not happen. That is, the response can best be described as relaxation.
Jeff Wright: Both of these would stop any gold rally
The dollar weakened on Tuesday as the market took into account Fed Chairman Jerome Powell’s comments during the approval session for his second four-year term, as we covered in the cryptokoin.com news. Jeff Wright, chief investment officer at Wolfpack Capital, cites Powell’s comments, saying:
No fireworks, no doves and no surprises! It is clear that the votes to be approved have already been counted, and his approval is a predetermined outcome.
Jeff Wright, in a statement, states that gold is doing well with Jerome Powell’s “go slow” management of the Fed. However, the analyst says he sees the possibility of an acceleration in asset reductions and quantitative tightening on the horizon, both of which will halt any gold rally.
Fed will be more cautious than minutes imply, says Peter Grant
On Tuesday, gold prices held steady and actually painted a ‘soft landing’ rather than a recession after Jerome Powell said the central bank’s plans to raise interest rates shouldn’t hurt economic expansion.
Peter Grant, vice president and senior metals strategist at Zaner Metals, commented on Tuesday that Jerome Powell notes that this will be a ‘long road’ to policy normalization, which will somewhat offset the more hawkish tone of the recently released FOMC minutes. Peter Grant, in a statement, made the following assessment:
He also said it could take up to four meetings to work out the parameters of a balance sheet reduction. This takes us to June. The Fed must act cautiously, tight enough to suppress inflation, but not fast enough to negatively impact the fragile labor market. In my opinion, the Fed sees full employment as the more important of its two tasks. This year, they will be more cautious than the minutes imply.
“In the short term, more gains seem to be preferred for gold”
Traders added nearly 4,000 contracts to their open positions on Wednesday and extended the uptrend for the third consecutive session, according to CME Group’s preliminary readings for the crude oil futures markets. Along the same lines, volume rose for the second day in a row, this time up by around 11.8k contracts.
As gold prices continued their uptrend for another session on Wednesday, the recent breakout of the $1,800 key mark looks credible and Wednesday’s rise was in line with increased open interest and volume, according to market analyst Pablo Piovano. The analyst draws attention to the following key level:
Against this, more gains seem preferable in the very near term, with the immediate target near the key resistance zone near $1,830.
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