Gold May See These Levels Next Week!

There is strong momentum in the gold space as investors reposition themselves as we enter an uncertain weekend focusing on Russia’s heavy attack on Ukraine. Market comments and gold forecasts from master analysts cryptocoin.com compiled for our readers.

Edward Moya: Gold will shine with more safe-haven flows

Gold gained more than $35 on Friday after Russian forces took control of Europe’s largest nuclear power plant in Ukraine in a very worrying attack. Edward Moya, senior market analyst at OANDA, said:

Unfortunately, there are no signs that the conflict in Ukraine will subside anytime soon. When we look at its impact on the global economy, we see that global growth concerns and inflationary pressures have become the dominant themes. This will likely lead to more safe-haven flows and the gold will shine.

These will help gold rise to $2,000

Thinking that the macro picture is set for gold to reach $2,000, as price increases in other commodities such as oil, palladium, nickel, wheat and corn, Edward Moya says:

The way things are going, you have a lot of basic commodities that are likely to continue to rise – grains, metals, energy. We will see prices rise in the foreseeable future. If commodity increases have a lasting effect on inflation, central banks will have to raise rates more aggressively. But that doesn’t mean it’s bad for gold.

“Although the US central bank has resisted rapid rate hikes when assessing the impact of the war, you shouldn’t rule out the possibility of a half-point increase this year,” said Edward Moya, adding that he’s still in the camp of four or five rate hikes this year. The master analyst makes the following prediction:

We may see the Fed become more aggressive in tackling inflation this summer. This uncertainty and this discussion will be positive for gold and will help gold rise to $2,000.

Kevin Grady: Inflation will be much higher due to energy

A key metric to watch for next week will be the latest US consumer price index (CPI), scheduled for release on Thursday. Kevin Grady, president of Phoenix Futures and Options LLC, commented:

We may see $150 oil soon. Inflation will be much higher due to energy. Wait until you see the next CPI number. It will be over 8%. Had they used the old metrics, annual inflation would have ranged from 12-15%.

Kevin Grady said on Friday that market participants should take positions for an uncertain weekend, explaining:

You never know what will happen over the weekend. Investors are nervous about the nuclear reactor and Russia’s takeover of some Ukrainian cities. They take long gold, short stocks and long crude oil positions.

Gold price levels to watch and next week’s data

Kevin Grady says the levels to watch on the way to $2,000 are $1,980 on the upside and $1,882 on the downside. At the time of this writing, April Comex gold futures were trading at $1,971.20, up 1.82% on the day.

Noting that $1,980 will act as short-term resistance, Edward Moya adds that gold could easily oscillate to $50 in all directions. However, when this level is reached, the analyst states that the market will be fixed at $ 2,000, pointing to the following levels:

The catalysts are all there. Once we break $2,000, then $2,050-$70 is the trading range where you will see gold find good resistance. Gold underperformed most other commodities. There is still tremendous momentum here.

Thursday will be the key data day for the February CPI and macro releases for which US jobless claims are scheduled for then. The ECB rate decision will also be made on Thursday. The risk of stagflation has clearly increased, complicating the ECB’s dilemma of how to respond to accelerating inflation that cannot be moderated by monetary policy. ING economists comment, “No one can seriously expect the ECB to begin normalizing monetary policy at such a time of high uncertainty.”

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