The Federal Reserve is in no rush to change its current higher-for-longer monetary policy stance. This significantly weakens the upward momentum in the gold market. According to some analysts, it would take a big miss in inflation to break the precious metal out of its current channel one way or another. However, analysts recommend taking a position in an alternative asset.
Ole Hansen: Market in ‘wait and see’ mode
cryptokoin.comAs you follow from , the Federal Reserve is laying the groundwork for eventual interest rate cuts. However, the Fed has pointed to later dates for the start of the easing cycle. That’s why analysts state that gold is stuck in a narrow trading range. Markets now predict that the Fed will ease interest rates in May. The gold market is finding support well above $2,000 per ounce. However, it failed to break the resistance above $2,050. Ole Hansen, head of commodity strategy at Saxo Bank, makes the following assessment:
The market went into wait-and-see mode, focusing on incoming US data. A weak CPI prices next week could support gold. However, it may not be enough. Because traders/investors now want to see a clear discount sign before committing.
Naeem Aslam: More room to the downside for gold!
Zaye Capital Markets Chief Investment Officer Naeem Aslam says it is clear that the gold market’s upward momentum has run out. He says weak inflation data has supported gold prices somewhat. However, he adds that he does not foresee a breakout anytime soon. Based on this, he comments as follows:
We do not think there will be a dramatic change in this figure. But anything that shows that the situation is still under control would be enough to push prices above the $2,050 price mark. However, for now, there seems to be more of a grind on the downside, with support near the $2,000 price mark.
Phillip Streible: Like a crocodile waiting for its prey!
Phillip Streible, chief market strategist at Blue Line Futures, says that while gold hasn’t done much as it consolidates, the market is bracing for a bigger breakout move. “Gold is currently like a crocodile lying in the water, waiting for its prey,” the analyst says.
““It’s up to the bulls to rule the market until it fails.”
James Stanley, senior market strategist at Forex.com, also says gold is curling up in its current consolidation formation. The analyst is bullish on gold. But even so, he notes that he would like to see prices fall below $2,000 and return to all-time highs to attract new investors. He notes that although inflation has fallen from its high in June 2022, it is still well above the 2% target. The analyst shares the following assessment:
This is not an environment in which the Fed should consider lowering interest rates. But they all say interest rates will fall this year. This keeps the US dollar in check and keeps gold prices above $2,000. While a correction for gold would be positive, you cannot ignore the market’s uptrend. It’s up to the bulls to rule this market until it fails.
Gold may be affected by stock markets
Christopher Vecchio, Head of Futures and Forex at Tastelive.com, expects gold, a non-yielding asset, to continue to hover above $2,000 as investors focus on gains in stocks. The analyst adds the following comment:
I think there’s a reason for gold to remain a bit higher right now. But I think people need to be cautious about viewing gold as something that is guaranteed to rise just because the Fed lowers interest rates. Right now, in a Goldilocks-style world, we’re having our cake and having it too. Inflation is low, the labor market is still healthy, and the economy is booming. This is not really a suitable environment for people looking for long gold.
“Gold is calm, but silver will see bullish momentum soon!”
Christopher Vecchio is neutral on gold. Despite this, he is entering the silver market as he expects to see bullish momentum soon. Vecchio notes that volatility in the silver market is near its lowest point in the past year. At the same time, prices remain below $23. The analyst explains his views as follows.
Like gold, silver typically has a positive correlation with volatility. So I started testing the market with a small long position against the June lows. I think strategically, given the possibilities of where we are right now. At these prices it is worth taking a very small long position.
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