Gold made a good start to the week. With this move, the yellow metal rose again above the psychological resistance of $1,700. However, he later gave back some of these earnings. Analysts say gold is pulling back gains at the beginning of the week due to the recovery in Treasury yields and the dollar.
“If this happens, it is possible for gold to approach $1,900”
Investors got an update on the strength of the US labor market today. “Everyone will be watching closely the US September NFP and its impact at the November Federal Reserve meeting,” says Chintan Karnani, research director at Insignia Consultants. Karnani notes that there must be an increase in unemployment in the US for the market to see a slower rate of increase in interest rates.
Last week, the number of applicants for US unemployment benefits rose by 29,000, data released on Thursday showed. Thus, it rose to a five-week high of 219,000. So this is likely a sign of increased layoffs as the US economy slows. Moreover, cryptocoin.comAs you follow, the Federal Reserve is raising interest rates to rein in inflation. This contributes to the rise of the dollar and puts pressure on gold prices in dollar terms.
Karnani says bond yields, the direction of U.S. stock futures and the U.S. dollar index (DXY) will continue to influence bullion prices until the U.S. September consumer price index is announced on Oct. US CPI figures will be released next week. The analyst notes that if it closes above the 50-day moving average after this data, gold will be “closer to $1,900”. Data from FactSet shows the 50-day moving average of December gold at $1,736.50.
“Gold may be ready for a relief rally”
Analysts at Sevens Report Research wrote that “recently established 2022 lows leave the path of least resistance lower for gold.” Gold futures on Sept. 26 fell to $1,633.40. This marks the lowest level since April 2020. Analysts make the following assessment:
However, with renewed hopes that we have reached the top of the falconry, gold could be poised for a relief rally from year-to-date lows. The key level to watch on the charts is the August high of $1,819. Because it is possible for a close above to be a bullish development technically.
“Gold will continue its downward movement”
Gold price saw above $ 1,720 during the week. However, TD Securities strategists still say that gold will be in a downtrend. Strategists explain their views as follows:
A prolonged period of restrictive interest rates suggests that traders should ignore the siren calls of gold. Because a sustained downward trend will most likely prevail. Quantitative tightening will continue to raise real interest rates.
Meanwhile, Shanghai traders began to pull out of gold. In addition, strategists note that money managers hold the largest net short gold since 2018, driven by trend followers. From this point of view, strategists make the following comment:
We think a break below $1,740 will likely fuel CTA cuts. Also, this would suggest that the jamming will progress further. Shanghai traders have left the market with fewer orders, moving away from precious metals.
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