Gold prices rose close to 2% on Friday as the dollar weakened amid reports of potential debate among US Federal Reserve officials about the pace of rate hikes. Thus, after weeks of consecutive losses, the shiny metal closed the week with gains. Analysts interpret the market and share their forecasts.
“It is possible for gold to see further declines”
Spot gold was last up 1.74% on Friday at $1,656.21. U.S. gold futures were up 1.2% to $1,656.3 dollars. The WSJ reported that Fed officials are making rapid progress towards another rate hike of 0.75 percentage points in November. He also noted that some officials are beginning to signal their willingness to slow the rate of increase soon. Daniel Ghali, commodity strategist at TD Securities, comments:
The Wall Street Journal article that talks about the pace of rate hikes gives a lot of insight for market participants.
Stephen Innes, managing partner of SPI Asset Management, comments:
The Fed is only halfway through the tightening cycle. There is probably more room for rates to increase. Therefore, it is possible for gold to see further declines.
“Most of the headwinds are already priced in”
Adding to the latest hawkish rhetoric on Thursday, Philadelphia Fed President Patrick Harker said the U.S. central bank will “continue to raise interest rates for a while.” Data released Thursday also showed that the number of Americans who filed for new unemployment benefits fell last week, bolstering expectations for another large rate hike next month.
However, Sugandha Sachdeva, vice president of commodity and currency research at Religare Broking, says most of the headwinds are already priced in. He also notes that this will provide gold prices with a base around $1,580-1,620. Sachdeva states that the impact of rising borrowing costs on the economy is beginning to emerge. For this reason, he notes that the Fed may go a little slower in interest rate hikes after the November meeting. Your words add that this should also support gold.
“It is possible for gold to break to $ 1,600”
Michael Hewson, chief market analyst at CMC Markets UK, comments on the latest developments:
Gold continues to be driven by the tide in yields and the strength of the US dollar. As yields continue to rise, gold is likely to remain bearish. Also, a break from September lows to $1,600 is possible.
“Fed’s aggressive stance remains the main driving factor for gold”
The US Federal Reserve and other central banks continue their tightening aggressive monetary policies. This makes the non-yielding yellow metal less attractive compared to other interest-bearing assets. Therefore, gold has lost more than 11% so far this year. Rupert Rowling, an analyst at Kinesis Money, explains:
Gold also failed to respond to the chaos in Westminster, with markets seeing the end of Liz Truss’ disastrous tenure as positive for stocks. The Fed’s aggressive stance remains the main driving factor, overriding others, including the Ukraine war.
“People started to buy gold as the price dropped”
cryptocoin.comAs you follow in , San Francisco Federal Reserve Bank Governor Mary Daly said on Friday that the central bank should avoid pushing the US economy into an “unforced downturn” through excessive tightening. She also added that the Fed is approaching a point where it should slow rate hikes.
From a physical point of view, gold demand from individual consumers in India has picked up speed this week. The recession in local prices before the festivals was also effective in this. Michael Matousek, chief trader of S. Global Investors, says that as gold falls, people start to buy gold.
“There are still more drops in the cards”
CME Group’s latest data for the gold futures markets shows that traders added just 893 contracts to their open interest positions on Thursday. Thus, it reached the third consecutive daily increase. Instead, volume reversed two consecutive daily gains and narrowed to more than 16,000 contracts.
Market analyst Pablo Piovano says Thursday’s inconclusive price action in gold is in the midst of a minor rise in open interest. He also notes that it hints at the possibility of further losses in the very near term. However, the next target for the precious metal remains at $1,614 (September 28), 2022 low.
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