Gold was flat on Wednesday, supported by a slight decline in dollar and US Treasury yields, as investors await US inflation data to gauge the Fed’s normalization policy. Gold prices rose 0.4 percent to $1,767. The dollar index fell 0.2 percent after hitting its highest level in more than a year in the previous session. So, what do analysts say about gold’s next move?
Can gold prices rise? Analysts announced…
DailyFX currency strategist Ilya Spivak said: “We will get US CPI data and this critical information from the September FOMC meeting, so I think gold has the capacity to see a directional catalyst after this period of consolidation. “If the CPI points to higher levels, then we can probably enter into expectations that the Fed may need to move faster to raise interest rates.”
Three Fed policymakers said on Tuesday that the economy had recovered enough for the central bank to begin withdrawing its crisis-era support, bolstering expectations that the Fed will begin reducing its bond buying as soon as next month. Meanwhile, money markets are pricing in aggressive rate hikes as inflationary pressures increase globally.
cryptocoin.com As reported by experts, decreasing central bank incentives and interest rate increases tend to increase government bond yields, which translates into a higher opportunity cost of holding non-interest-paying gold. Jeffrey Halley, senior market analyst at OANDA Asia-Pacific, said in a note there was also an increase in risk aversion ahead of the US earnings season. He said the Fed’s threat to reduce bond buying should limit the rally of gold, and the bias is still to the downside in the coming weeks.
Commerzbank analyst: $1,900 by year end
“Amid an environment where we see the Fed slowly moving towards reducing asset purchases, we’re seeing undertones of support coming from the general idea that inflationary pressures will be enough to keep the bottom up,” said David Meger, executive director of High Ridge Futures. However, Meger said that in general, the dollar is pulling the heels of the gold market and limiting its rise.
On the other hand, Commerzbank analyst Daniel Briesemann said, “There is more risk aversion in the market and gold is taking advantage of it, along with concerns about inflation and the cooling of the global economy.” Briesemann said that if stagflation talks come to the fore more and more, gold could trail $1,900 by the end of the year because interest rates should remain relatively low even as the Fed begins to decline.
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