Market analyst Ross J Burland noted that the gold price showed a five-day uptrend at the critical resistance of around $1,795 early on Monday, and the yellow metal renewed several-day tops, supporting the broad US dollar weakness the previous day, but a daily close above the 200 DMA. and states that it could not provide a descending trend line compared to June. TD Securities analysts and Ross J Burland’s evaluations and analyzes on gold prices. cryptocoin.com we have compiled for you.
TD Securities: We think market pricing for Fed hikes is too hawkish
Fed Chairman Jerome Powell’s support of tapering and the lack of comments on ‘temporary’ inflation pressure in his speech questioned gold buyers on Friday, according to analyst Ross J Burland. However, the analyst notes that the continued struggle of China’s real estate player Evergrande and the latest optimism about the US stimulus package are accompanied by lower Treasury yields to keep the gold bulls positive. On the other hand, fears of the new Covid from Beijing and rumors about Modern Land, another real estate firm from China, which is trying to pay $250 million in 12.85% bond interest by Oct. forcing.
Except for the JPY, all other G10 currencies outperformed the US dollar this month. According to the analyst, the “catch-up” movement of money market rates for other currencies has become a contributing factor for investors to close positions that are too long in the US dollar. Ten-year breakeven yields are consolidating at their highest level since 2012, highlighting inflation as the top issue for global investors. The analyst reminds that, looking at the positioning data, speculators only marginally increased their positions with modest short closing as prices rose, despite high inflation expectations.
Meanwhile, the dollar rally waned as investors expected earlier rate hikes in other currencies. Data released on Friday meanwhile showed US business activity rose solidly in October, showing economic growth picking up at the start of the fourth quarter as COVID-19 infections dwindled. Regarding the impact of developments on gold prices, TD Securities analysts make the following assessment:
While gold prices have historically outperformed most major asset classes during times of high inflation, investors are wary of the yellow metal as they focus heavily on pricing the Fed’s exit. Still, we think market pricing for Fed hikes is too hawkish, as it doesn’t think the rise in inflation is due to a potential energy shock and ongoing supply chain shortages.
“Gold prices are underperforming tremendously compared to their historical peers”
In addition, analysts argue that the market is increasingly assessing a policy error that is unlikely to occur, considering that since central banks’ response functions have historically been related to growth rather than inflation, they are more likely to overlook these disruptions. TDS analysts explain their assessment as follows:
The reasons for owning the yellow metal become even more compelling as Fed pricing is likely to loosen. In this context, gold prices are underperforming tremendously compared to their historical counterparts. A break from the multi-month downtrend in the yellow metal, however, could signal that hedging flows are finally outpacing the speculative outflow linked to Fed pricing.
Ross J Burland adds that the fiscal slump in the US and the end of extraordinary unemployment benefits will slow the pace of economic gains, which will eventually cause Fed pricing to reverse to support gold prices. The analyst draws attention to the following levels:
From the daily perspective, gold is attempting to move up in Friday’s price action shows. The wick height of Friday’s candle is a possible target for the coming sessions. $1,835 is protecting the $1,880 zone as shown on the chart.
Graphic-1
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Disclaimer: The articles and articles on Kriptokoin.com do not constitute investment advice. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, assets or services in this article.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.