Gold recorded the biggest drop in a month in the previous session. On Tuesday, a stronger dollar continued to dampen bullion’s appeal. Also, investors turned away from the yellow metal in anticipation of the Fed’s signs of further policy tightening. In the midst of these developments, precious metals increased losses. Analysts interpret the market and share their forecasts.
Ricardo Evangelista: This scenario punishes gold
Spot gold was down 0.2% at $1,775.30 at the time of writing, after falling more than 1% on Monday. U.S. gold futures were last traded at $1,790.20, down 0.4%. Along with bullion, the dollar is also considered a safe store of value. The dollar benefited from a disappointing set of economic data from China and a surprise rate cut by the Chinese central bank. Ricardo Evangelista, senior analyst at ActivTrades, comments:
Amid this uncertainty, investors are finding comfort in the security of the dollar in a dynamic that punishes gold due to the inverse price correlation between the two.
cryptocoin.comAs you follow, Wednesday’s FOMC minutes will be released. If the minutes show more falconry signs, Evangelista says, the dollar’s appeal will increase even more. He also notes that this scenario would punish the gold.
Xiao Fu: Gold may consolidate in current range
Meanwhile, Fed officials put on a hawkish tone. They signaled further rate hikes this year to curb high inflation. Rising US interest rates tend to weigh on noninterest-bearing nuggets. Bank of China International analyst Xiao Fu says investors are also withdrawing from funds traded on the gold exchange. He also states that it is possible for this to put pressure on gold. The analyst makes the following statement:
A sign from the minutes of the Fed’s latest policy meeting on future rate hikes could be important for gold. Because this continues to be a big headwind for bullion. Gold is also likely to consolidate in the current range for the next few weeks.
Matt Simpson: Gold failed to attract safe-haven streams
Supported the dollar after weak global economic data fueled recession fears. City Index senior market analyst Matt Simpson says a series of weak data from China has fueled fears of a global slowdown. The analyst notes that this development pushed the US dollar against metals. Simpson makes the following comment in this context:
Gold failed to attract safe-haven flows. Therefore, a break of the $1,783 support likely triggered pauses along the way. Also, the moderate attempt to close above $1,800 on Friday was a hint that all is not well for gold at these higher levels.
Marc Chandler: Gold falls due to rising dollar strength
Some analysts attribute the negative mood of gold to weak economic data from China and surprise rate cuts from the Chinese central bank.
However, Bannockburn Global Forex chief market strategist Marc Chandler attributes the gold pullback to the renewed strength of the US dollar. The US Dollar Index fell to its weakest level in a month late last week. However, it rose 0.8% on Monday.
Chintan Karnani: This is how yellow metal could attract short-term investors
Chintan Karnani, research director of Insignia Consultants, sees gold’s bearish movement as a technical game. According to Karnani, the fall is just a technical game with bond yields. The analyst also says that DXY is a price dictator for gold. From this point of view, the analyst makes the following assessment:
The fact that gold did not trade above $ 1,800 also led to profit realization. Gold should show signs of forming a price base lower than $1,800 to attract short-term investors.
Meanwhile, financial markets in India are closed on Monday for Independence Day celebrations. Chintan Karnani also says that the decline in gold is partly due to this closing. Therefore, when Indian markets reopen on Tuesday, India notes that gold demand should push up precious metal prices.
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