Gold prices rose modestly on Friday, but changed little from a week ago. Oanda’s senior market analyst, Edward Moya, said that gold prices soared after Chinese real estate giant Evergrande’s troubles went beyond China, while US Evergrande investors have not yet received interest payments. According to the senior analyst, it looks like China will not bail out Evergrande, but will try to contain the systemic risks that should lead to some safe-haven flows for gold.
“Gold price will break the $1,840 resistance when China’s cryptocurrency ban comes true”
cryptocoin.com As we reported, gold prices rose on Friday, a day after they recorded their sharpest daily loss in a week as investors continue to digest the Federal Reserve’s monetary policy plans as well as Chinese pressure on cryptocurrencies and developments tied to real estate giant Evergrande. . Precious metal prices finished the week just a few cents above last Friday’s deal.
The People’s Bank of China on Friday reiterated its crackdown on cryptocurrencies, stating that virtual currency does not have the same legal status as legal currency. Insignia Consultants research director Chintan Karnani underlines the following in a statement:
If and when there is confirmation that China will eliminate cryptocurrencies, gold price will break the $1,840 resistance. There needs to be more clarity about a possible crypto ban from China. History shows that cryptocurrencies have risen sharply after any major price drop (regardless of the news). So wait and see for cryptocurrencies.
Jeff Wright: Gold trend still down
The December gold contract is trading at $1,751.70, while Thursday’s 1.6% drop represents the sharpest one-day drop for bullion since Sept. 16, according to data from FactSet. Gold futures closed the week 30 cents higher than the $1,751.40 contract last Friday. Jeff Wright, chief investment officer at Wolfpack Capital, said the trend for gold is still down, as the Federal Reserve’s statement on monetary policy and Fed Chairman Jerome Powell’s comments on Wednesday were “digested by the market”.
The Fed’s tapering of bond purchases will begin by the end of the year, and interest rates will likely begin to tighten in 2022. On Wednesday, the Fed signaled its intention to cut bond purchases soon and raise interest rates by the end of next year; this can reduce appetite for bullion if investors shift to assets that offer yields. The central bank’s rate hike projections also pointed to rate hikes as early as 2022, which could negatively impact demand for precious metals.
Jeff Wright also sees a feeling of “risk aversion” in U.S. equity markets on Friday due to Evergrande’s delay in interest payments and its possible impact on the Chinese and U.S. economies as a boost for gold. The investment expert comments:
Indirect exposure is a risk currently being taken into account. So, there is a small appetite for safe-haven gold, but I believe it is short-lived.
Looking ahead, analysts say that in the absence of a short-term catalyst, gold could be more affected by US dollar movements and risk appetite. “Going forward, investors should understand that unless something significant happens in the dollar index, gold prices will be more impacted by investors’ risk appetite,” Naeem Aslam, chief market analyst at AvaTrade, wrote in his daily note.
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