cryptocoin.com As we reported, the gold price rose on Monday, pulling the price streak for the third consecutive session, closing at the highest level since the beginning of September. ThinkMarkets market analyst Fawad Razaqzada states that if the gold price were to drop, it would have to happen after the (Federal Open Market Committee) decision last Wednesday. Fawad Razaqzada comments:
Instead, it rallied towards the close of the week and looks poised to post more gains. Especially if the upcoming speeches from central bank officials continue to suggest that monetary policy will not be tightened aggressively and that inflation will be temporary.
“First of all, we need to see if we continue to hear more dovish rhetoric from central banks.”
Market analyst Fawad Razaqzada said: “Last week, the Bank of England was talking but they failed to walk because they refused to raise interest rates even though they previously said they probably would. Moreover, the pigeon discourse from the European Central Bank continued”. The ThinkMarkets analyst also notes that the Fed’s decision to cut its bond-buying program by $15 billion on Wednesday is fully priced in, and presumably so are the downside risks to gold and silver. Fawad Razaqzada continues his assessment as follows:
Let’s see if we continue to hear more pigeon rhetoric as a few central bank officials speak this week. If so, that should be good news for stocks and gold or risk assets in general. The big risk is that we will see a large increase in US CPI inflation. This seems unlikely, but not entirely impossible.
Gold price for December delivery rose 0.6% to $1,828 after gaining 1.8%. The most active contract prices mark the second-highest straight finish and third consecutive session gains since Sept. 3, data from FactSet show. Michael Hewson, chief market analyst at CMC Markets UK, points out in a note:
The aftershocks of the unexpected dovish trend from central banks continued to push prices higher.
What will be the directional determinant for the gold price?
Gold continues to trade higher on Monday after a pair of top US Fed officials said the central bank could raise interest rates by the end of 2022 amid a rapid recovery in the economy and a prolonged period of hyperinflation. Fed Vice Chairman Richard Clarida reiterated on Monday that rate hike benchmarks could be met before the end of 2022, while St. Louis Fed Bank President James Bullard said in an interview with Fox Business that he expects the central bank to raise interest rates twice in 2022.
Last week, the Fed said it was ready to make adjustments to the pace of its bond-buying program “if it was warranted by changes in the economic outlook”, raising some expectations that the central bank could raise interest rates faster if needed. Marios Hadjikyriacos, senior investment analyst at XM.com, comments in a daily note:
Bullion has essentially turned into a trade-off on how quickly the Fed will pull the rate hike trigger. Expectations of normalization benefit each time they are pushed back and suffer each time they are brought forward.
Gold tends to be seen as a hedge against rising inflation during the recovery phase of the COVID-19 pandemic. Last week, the 10-year Treasury yield, used to price everything from mortgages to auto loans, fell to 1,474%, posting its sharpest weekly drop since June 12, 2020, helping to pave the way for higher moves for bullion and other non-yielding precious metals. is happening. CMC Market’s Hewson says the next key resistance to gold prices is the mid-summer peak of $1,835, which has been a solid barrier since mid-July.
Significantly more dollar weakness is likely required for a sharper decline in bond yields and a move higher. Neither of these seems very likely at the moment.
However, data released Friday revealed that the US created 531,000 (more than expected) jobs in October, but a disappointing number of people chose to join the workforce last month, and rising inflation blunted prospects for stronger economic growth.
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