On Tuesday, the Dollar index (DXY) benefited from the low risk sentiment, while the gold price fell. Bullion is likely to remain volatile until Friday’s US jobs numbers and await hints of the Federal Reserve’s tapering plans. cryptocoin.com We have compiled the expectations and evaluations of different analysts regarding gold prices for you.
Jeffrey Halley: Gold price may find support on dips to $1,750
Spot gold was down 0.6% to $1,758.27 at press time, while US gold futures were down 0.6% to $1,757.30 after hitting $1,770.41 on Monday, its highest since Sept. 23. declined. DXY rose, making gold more expensive for buyers holding other currencies, while equity markets slumped on concerns that rising energy prices could dampen economic growth.
OANDA Asia-Pacific senior market analyst Jeffrey Halley says weak stocks encourage Asian investors to buy dollars and put pressure on gold, and that the precious metal will fluctuate in the $1,750-1,785 range ahead of the US jobs report. Meanwhile, in addition to inflation, fragile US-China trade relations, China Evergrande’s debt crisis and the stalemate in the US debt ceiling also lead to safe-haven inflows of gold, providing a base for bullion prices. Jeffrey Halley comments:
Gold could find support for dips to $1,750 this week as inflation and US fiscal fears escalate.
Jeffrey Halley adds that uncertainties will support gold to some extent, but ultimately the US monetary policy direction will be the winner.
Some analysts think tapering is already priced in
Nonfarm payrolls are expected to show continued improvement in the labor market, possibly allowing the Fed to begin reducing stimulus before the end of the year. Reduced stimulus and higher interest rates put pressure on gold by raising bond yields, increasing the opportunity cost of holding interest-free bullion.
DailyFX foreign exchange strategist Ilya Spivak comments that what moves the gold markets at this point is how much and in what time frame interest rates will be increased. Some analysts think that the impact on gold may be limited due to the pricing of tapering. OANDA analyst Craig Erlam comments:
We are seeing more risk aversion in the markets and gold seems to be taking advantage of it. We have often seen the dollar perform well in these gold-driving conditions. But today we see the opposite. Perhaps investors are a little nervous about central banks pulling back stimulus at such an uncertain time for the economy.
Near-term dollar bias rising, according to Mark McCormick
Risk appetite will continue to provide short-term direction for safe-haven demand ahead of the US nonfarm payrolls report on Friday, said ActivTrades senior analyst Ricardo Evangelista.
“There is a lot of bad global news priced in the US dollar,” Mark McCormick, head of global FX strategy at TD Securities, said in a report, adding:
The key for markets in the coming weeks is to rank the extent of the risk premium currently priced against how these factors come to be. While the near-term dollar bias is rising, we are cautious to follow the move at these levels.
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