Gold Price Predictions from 8 Analysts: Get Ready!

The gold price hit a one-week high on Friday as the dollar retreated from recent highs. But bullion is heading for its worst quarter since March last year. Analysts interpret the market and share their forecasts.

“Gold is in a region where it can go a little higher”

Spot gold was last traded at $1,661.89, up 0.1%. However, it gained 1.1% this week. U.S. gold futures rose 0.2% to $1,672. Daniel Pavilonis, senior market strategist at RJO Futures, commented:

The gold market is in an area where we could see some higher movement. However, it all depends on what the dollar is doing and how interest rates are going over the weekend.

“Macro powers weaken the appetite for investment in gold”

cryptocoin.comAs you follow, gold is down 8% in the quarter so far. This is also the sixth month in a row for bullion. This means it will record the longest monthly series of declines in four years.

Meanwhile, Russian President Vladimir Putin signed agreements to annex the four Ukrainian territories he occupied. After that, gold did not show a serious reaction. Daniel Ghali, commodity strategist at TD Securities, comments on the developments as follows:

We are facing an environment of really high inflation. After all, that’s why the Fed is so aggressive. These macro forces are really weakening the appetite for investment in gold. That’s why investors don’t look at the metal as a viable safe-haven hedge.

“Gold price may test $1,680 in the short term”

The dollar index (DXY) traded close to a one-week low. Thus, it made gold cheaper for buyers of other currencies. FXTM analyst Lukman Otunuga explains:

Gold price gains strength from a weak dollar. As the week is slowly coming to an end, the Treasury is easing interest rates. However, current gains are likely to be limited, given how gold’s weight-bearing underlying factors are. Meanwhile, prices are likely to test the $1,680 level in the short term.

“Probably the gold price rise will be limited”

Fed policymakers are determined to raise interest rates despite the turmoil in global financial markets. Kinesis Money foreign analyst Carlo Alberto De Casa says once it becomes clear how much the Fed will tighten its policy, gold could bottom and start to rally. City Index analyst Matt Simpson points out the following levels:

Gold’s upside momentum is already fading. It was also paused in a previous consolidation zone around the $1,660 – $1,680 area. Unless we see another drop for the dollar, gold’s rise will likely be limited.

“Gold is likely to find support around $1,600”

Meanwhile, the UK economy grew unexpectedly in the second quarter. However, contrary to an earlier prediction that it recovered, it still remained below its pre-pandemic peak. Ajay Kedia, director of Mumbai Kedia Commodities, comments:

Presumably, physical demand from India and China will be supportive as October moves into November. So, I’m not too down on gold. It is possible for the gold price to find support around $1,600.

“The risk of capitulation for gold remains high.”

Gold price is in a stronger downtrend despite the recent USD bearish break. In the view of strategists at TD Securities, this trend will continue. In this context, strategists underline the following:

With strong data continuing to point to a more aggressive Fed rate path ahead, the risk of capitulation for the yellow metal to move into October remains high.

“Gold price will experience a prolonged period of significant weakness”

Strategists say interest markets are increasingly pricing a higher rate. However, they note that gold prices are not priced in the next phase of the walking cycle. Based on this, they make the following statement:

Historically, the price of gold has tended to systematically and significantly underperform in the second phase of walking cycles as interest rates enter the restrictive zone. Given the increasing persistence of inflation in this cycle, it’s possible that a restrictive regime will outlast historical precedents. The Fed is likely to keep rates higher for a while. Even as recession risks rise, this indicates a prolonged period of significant weakness in precious metals.

“If the NFP strengthens the dollar, it is possible for gold to suffer”

Commerzbank economists expect a fresh correction after a respite if the USD appreciation continues after the US labor market report is released. They explain their expectations as follows:

If the Purchasing Managers Index remains fairly stable as expected, markets will likely take a breather until new US labor market data is released on Friday. If the numbers cause the US dollar to appreciate further, the yellow metal is likely to continue falling.

Meanwhile, economists note that ETF investors continue to withdraw from gold ETFs. This puts additional pressure on the gold price. Also, most speculative financial investors are now betting for a price drop again. The economists’ assessment is as follows:

A price rebound began soon after, in July, when speculators last took a net short position. However, for that to happen, the USD will probably have to stop gaining value for now, like it did two months ago.

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