As markets feared the hawkish Fed, Wall Street plunged in gold prices. Wall Street turned its gold price prospects for the next week to negative as gold fell once again from $1,800, according to Kitco’s weekly gold prices survey. Details cryptocoin.com‘in.
Gold prices this week
This has been a tumultuous week for gold prices, with mixed economic data and a hawkish statement from the Bank of Canada gaining momentum from the precious metal. December Comex gold futures were last trading at $1,778 an ounce, down 1% weekly. The rising US dollar renewed selling pressure on gold, especially when the metal hit $1,806 an ounce earlier in the week. Most of the losses were reported Friday, as gold fell more than $20 on the day. Markets were also busy digesting a sharp slowdown in the US economy reported in the third quarter. Also, the annual core PCE price index, the US central bank’s preferred measure of inflation, remained high at 3.6% in September. And the Bank of Canada surprised this week by ending its quantitative easing program and pulling up the rate hike timeline.
The results of Kitco’s gold price survey showed that 53.8% of the 13 participating analysts on the Wall Street side are in a downward trend towards the price of gold next week. Another 30.8% was neutral and only 15.4% uptrend. The Main Street side remained optimistic. Of the 745 retail retail investors who participated, 60.5% were up in prices next week, 22.5% were down and 17% were neutral. Marc Chandler, managing director of Bannockburn Global Forex, told Kitco News:
“Color me negative. The prospect of continued central bank policy repricing will likely weigh on gold. It’s as if the market is saying that central banks are realizing they’re behind the inflation curve and will act quickly to remedy the situation. Gold tested the upper end of its last range but sold to new weekly lows ahead of the weekend. October advance appears. Next week, the first target is $1,768 and then $1,757.”
Inflation determinant
The strong US dollar is another reason why analysts are keeping gold prices so low in the short term. SIA Asset Management Chief Market Strategist Colin Cieszynski: “I am optimistic about the US dollar for next week. “As inflation pressures continue to mount, I think the Fed may need to take a more hawkish tone at next week’s meeting and directly announce or hint at the beginning of reducing asset purchases,” he said. The Federal Reserve announcement, scheduled for Wednesday, will be the top event to watch next week. Friday’s employment data also tops analysts’ lists.
Kitco News senior analyst Jim Wyckoff said: “The trend is still up on the daily chart, but the bulls have weakened on Friday and they need to show new strength soon to keep it alive. “Friday’s weekly low close will give the bears some momentum early next week.” Darin Newsom, head of Darin Newsom Analysis, said that in the short term, gold should hold its next level of support, its target of $1,760 per ounce. Adrian Day, head of Asset Management, stated that the inflation narrative and the market’s perception of it remains the main driver for gold to move forward. “We will continue this back and forth until more people realize that inflation will be more persistent than advertised and that higher consumer prices are due to monetary surplus, not base effects or supply chain problems. “Investors can be pretty blind to chaos with a slowing economy, rising inflation and a debt crisis pending in Washington.”
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