Gold slumped on Tuesday amid interest rate hike expectations and pressure from a stronger dollar. However, mounting recession fears kept the safe-haven metal above the key $1,800 support level. On the other hand, it fell sharply after data pointing to recession fears. Analysts assess that the bright metal will find demand in an environment dominated by uncertainty.
“Gold price may continue its sideways movement in this range”
Although gold saw below $ 1,800 during the day, it managed to rise above it again after a short time. However, he later dived again. At press time, spot gold was trading at $1,767, down 2.27%. U.S. gold futures fell 1.99% to $1,765.7. The dollar strengthened near two-year highs, making gold less attractive to offshore buyers. Carlo Alberto De Casa, foreign market analyst at Kinesis Money, comments:
It is possible for gold to continue its sideways movement between $1,750 and $1,900 for a while. The strength of the dollar complicates further recovery of bullion. But at the same time, investors want bullion in their portfolio due to high uncertainty.
“Yellow metal is an important instrument for balancing portfolios”
Gold is accepted as a measure against inflation. On the other hand, increases in interest rates put pressure on the non-yielding shiny metal. cryptocoin.comAs you can follow, the Federal Reserve increased interest rates by 75 basis points at its last meeting. Minutes of this policy meeting and US nonfarm payroll figures will be released this week. Investors and traders will follow this data for indications on the pace of policy tightening.
Alberto De Casa adds that gold is an important instrument to balance financial portfolios in the current economic uncertainty environment. Because inflation and interest rate hikes have opposite effects on gold prices. This brings gold to the forefront in terms of balancing the portfolio content.
Stephen Innes: It is possible for gold to find support in this situation
Meanwhile, in physical markets, India’s gold imports in June nearly tripled from levels a year ago as prices adjusted. Therefore, due to the deterioration in the foreign trade balance, the Indian government increased the tax on gold imports. Also, Zimbabwe’s central bank said it will start selling gold amid the spiraling inflation.
Stephen Innes, managing partner of SPI Asset Management, assesses inflation concerns and the Fed’s next steps. In this context, the analyst makes the following prediction for the gold price:
Gold price is stuck in the $1,790-1,830 range. Meanwhile, recession concerns and the Fed are likely to soften their policy stance as the market returns from inflation concerns. In this case, it is possible for gold to find support.
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