Gold failed to make an exit rally after lower inflation data. Despite this, the precious metal continues its efforts to close Friday with its fourth consecutive weekly gain. However, Wall Street analysts do not have a consensus on the price of the metal next week. In other words, both bullish and bearish expectations for the value of gold remain strong.
Recent developments affecting the gold price
The main message of this week’s macro data was the slowdown in US inflation. Yet FED speakers continued to backtrack against the idea of a potential Fed axis. cryptocoin.com As we have reported, the US Consumer Price Index (CPI) came in at 8.5% in July, below 9.1% in June. Thus, it failed the market expectations of 8.7%. Core inflation, which excludes variable food and energy costs, accelerated by 5.9% compared to a year ago. Thus, it maintained its June momentum, albeit somewhat surprisingly on the downside. On top of that, the US Producer Price Index (PPI) rose more slowly in July, reaching 9.8% year-on-year compared to 10.4%.
However, despite signs of falling inflation, the Fed remains committed to tightening. Minneapolis Fed Chairman Neel Kashkari spoke at the Aspen Ideas Conference this week. In his speech, he said the US central bank was “far from declaring victory” over inflation. Kashkari talked about the need to raise rates to 3.9% by the end of the year and to 4.4% by the end of 2023. Accordingly, the funds rate of the FED is currently in the range of 2.25%-2.5%. San Francisco Fed President also shared the same views with Kashkari on various platforms. In response to these developments, the price of gold rose. However, it failed to rise significantly above the $1,800 per ounce level as many bulls had expected. At the time of writing, gold was changing hands at $1,795 per ounce.
11 Wall Street analysts analyzed gold
11 Wall Street analysts analyzed the price of gold for the week ahead. The survey revealed that Wall Street is evenly divided on which direction the price will go next week. Of the 11 analysts who participated in the research, 9% preferred to remain neutral. Of the rest, 45.5% expected higher prices, while the other 45.5% predicted lower prices. However, Main Street forecasts a rise in the gold price for the next week. 216 retail investors participated in the Main Street survey. Accordingly, 42.1% of 216 investors expect higher prices. 28.7% are betting on a move lower and 29.2% prefer to remain neutral.
According to analysts, the US dollar is likely to recover next week. Therefore, the US dollar will inevitably weigh on gold. Marc Chandler, managing director of Bannockburn Global Forex, says he saw initial support in the $1,765 area. It also indicates that a break of $1,750 will likely force some late buying. Adam Button, chief currency strategist at Forexlive, says Fed officials have played a central role in keeping gold’s momentum in check. He also explains that he expects rates to be below market expectations of 4% annually. Even analysts who expect bullishness for the coming week are cautious in making this call. “Short-term resistance is at the 4-day high at $1,824,” said Darin Newsom, Head of Darin Newsom Analysis. Short-term support is at $1,798, a 4-day low. “This creates a narrow range and increases the likelihood of a breakout in one direction or another.”
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