The gold price held near its highest level in more than a week on Friday, supported by the retreating US dollar and lower Treasury yields as markets await economic data to gauge the pace of upcoming US rate hikes. Analysts’ gold price predictions and market comments cryptocoin.com compiled for our readers.
“There is a key resistance level at $1,830 for gold price”
The price of gold bullion is up nearly 1.4% so far this week, posting the highest increase since November 12. Michael Hewson, chief market analyst at CMC Markets UK, comments:
The fact that US inflation figures are not as high as people think may be in gold’s favor. A weaker dollar and falling interest rates this week helped gold rise.
Federal Reserve policymakers have signaled this week that they will start raising US interest rates in March to fight inflation. Meanwhile, investors await US economic data, including retail sales, later in the day, after December’s CPI data came in line with expectations. As the dollar slumps to its lowest level in more than two months, benchmark US 10-year Treasury yields are experiencing their first weekly decline. Saxo Bank analyst Ole Hansen comments:
There is strength in the market but at the same time there is a key resistance level at $1,830 that gold will try to break. Because for that to happen, more dollar weakness or more easing in bond markets will be needed.
Is gold’s performance disappointing?
Ed Moya, a senior market analyst at OANDA brokerage firm, says the overall gold market response to the data has been pretty quiet as it doesn’t change the Fed’s narrative of what to do in March. Ed Moya adds that the fact that PPI data is mostly below expectations and the rise in unemployment claims support the idea that the Fed may put the brakes on “hawk rhetoric”.
“Gold’s performance is somewhat disappointing, in a way, given the highly seismic collapse in the US dollar,” comments Ross Norman, an independent analyst.
Peter Grandich of Peter Grandich & Co says that financial assets regularly go through cycles of market enthusiasm and despair, and investors should pay attention to what cycle each asset is in and invest accordingly. Peter Grandich states that a sentiment shift is about to occur for cryptocurrencies and precious metals right now:
We almost spent 2021 on things like stocks, bonds, and Bitcoin at the beginning of the cycle. Now, maybe a few of them are worried because they are over their heads. But then you look at things like gold and silver, they’re in despair and depression. Even people who once talked about them regularly tried to hide and talk about something else. So there is a real shift in emotion.
However, Peter Grandich emphasizes that if the asset is bought when sentiment is low, the chances of getting better returns in the long run are higher.
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