The gold price could not hold around $2,400. Following this, the yellow metal is seeing strong selling pressure. There is a possibility that the market will fall over the summer. However, gold is in a solid position to rise by the end of the year, according to one market analyst.
Gold may fall to $2,100, but it will close the year at this level!
cryptokoin.comAs you follow from , gold has seen sharp sales in recent days. Chantell Schieven, Research Manager at Capitalight Research, says gold is not just technically overbought. It also notes that the shiny metal has begun its historical seasonal weak period. Schieven predicts that gold prices could potentially drop to $2,150 in this environment. This level represents the breakout level in March.
Chantell Schieven expects a correction in gold over the next few months. However, he remains a long-term bull. The analyst says he raised his year-end price target to $2,500 from $2,400. Meanwhile, at the beginning of the year, Schieven was the most bullish analyst participating in the London Bullion Market Association’s annual price forecast. The analyst explains his predictions as follows:
It’s been a bit surprising to see gold climb to all these levels, and while I think it will go higher, I think we should see some pullback. I don’t think gold will drop to $2,000 or below. However, we could see $2,100 before the end of summer.
That’s when we will see gold prices rising!
Chantell Schieven also explains why she is cautious about gold in the near term. The analyst says the biggest reason is changing interest rate expectations, which are supporting higher bond yields and a stronger US dollar. Meanwhile, markets are now delaying the start of the Fed’s easing cycle until after the summer. According to the CME FedWatch Tool, markets see the probability of a rate cut in June as less than 20%. At the same time, the probability of a rate cut in July has fallen below 50%.
Schieven said, “Gold has moved away from its fundamental factors a little bit. I think we’re starting to see these factors come back into focus. “This will probably be negative for gold,” he says. But Schieven adds that the gold market has become much more nuanced than simply tracking bond yields and the US dollar. While the Fed is not expected to cut interest rates in the summer, it is also unlikely to raise interest rates. In this context, the analyst makes the following comment:
The Fed will eventually lower interest rates this year. I expect them to lower interest rates after the 2024 elections. That’s when we will see gold prices rise and climb towards $2,500. Summer lows may be a good time to buy for long-term investors.
Inflation will play a more critical role in gold’s price movement!
Chantell Schieven also expects inflation to play a more critical role in gold’s price movement. He points out that with the Fed remaining firm on monetary policy, higher interest rates mean real rates will rise, reducing the opportunity costs of gold as a non-return asset. The analyst explains his views on this subject as follows:
Ultimately, the Fed, despite its hawkish comments, continues to leave room for them to lower interest rates. They will be cutting interest rates even as inflation remains stubbornly above the 2% target. The Fed cannot sustain higher interest rates due to rising debt levels.
$3,300 in the next 5-6 years is not out of the question!
Chantell Schieven says gold remains in a long-term uptrend given this year’s high volatility. Schieven points out that high inflation, economic uncertainty and geopolitical turmoil caused gold prices to double in the 1970s. Although such a scenario is unlikely today, Schieven notes that it is not out of the question. “We do not think it is out of the question to expect a $3,300+ gold price in the next 5-6 years,” the analyst wrote in a recent report.
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