Bets on rate hikes gained traction after better-than-expected US jobs data. While this supported the rise of the dollar, it also put pressure on gold prices. The yellow metal closed the week flat on Friday after falling for three consecutive weeks. Analysts interpret the market and share their forecasts.
Bob Haberkorn: There’s some bargain hunting underneath
Investors choose the dollar, which has risen to two-year highs. That’s why gold hasn’t been able to attract safe-haven flows, despite rising recession risks lately. Bob Haberkorn, senior market strategist at RJO Futures, comments:
Employment data pushed gold that struggled after such a strong dollar rally. However, here comes some bargain hunting for gold.
Carsten Menke: Permanent recovery unlikely for gold
Job growth in the US was higher than expected in June. The unemployment rate remained near pre-pandemic lows. That, in turn, points to persistent labor market strength for Fed ammunition to deliver another 75 basis points gain by the end of this month. Carsten Menke, head of Next Generation Research at Julius Baer, says:
In the short term, we see that gold is still supported by recession risks. We expect prices to consolidate after the last correction. Assuming the Fed can fight inflation without putting the economy in a recession, a lasting recovery is unlikely.
Important technical levels for yellow metal
A triple payroll and another strong CPI figure (next week) will only serve to push the dollar higher and gold lower, according to CMC Markets UK chief market analyst Michael Hewson. The analyst draws attention to the following levels for gold from a technical point of view:
A break below the $1,760 level is likely to signal a decline to 2021 lows near $1,720 and potentially $1,680.
“Gold has not been able to maintain its reputation as a safe haven lately”
Meanwhile, on Thursday, two of the Federal Reserve’s loudest hawks said they would support a 75 basis point rate hike this month. They also noted that they consider it appropriate to switch to a slower pace afterwards and do not consider the recession risks to be significant. In a note, Commerzbank analyst Carsten Fritsch highlights:
Gold has not been able to maintain its reputation as a safe haven lately. In addition, the Fed is considering adopting an even more restrictive stance if pressure from high inflation persists.
“Main factor weighing on shiny metal: US dollar”
cryptocoin.comAs you can follow from , gold has come under significant pressure recently. It fell to a nine-month low in recent weeks. However, according to Commerzbank economists, the decline in the price of gold is extreme. Therefore, recovery of the yellow metal is possible. In this context, economists make the following statement:
The main factor affecting the price of gold is the strong US dollar, which has risen to its highest level in almost 20 years. ETF investors are turning their backs on gold. Gold ETFs tracked by Bloomberg have recorded nearly 60 tons outflows in the last two weeks alone. However, we find the current price weakness exaggerated. Persistently high inflation and recession risk are in favor of gold. This indicates that the price will recover.
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