Gold prices hovered near one-year highs on Friday as the latest US economic data bolstered hopes that the Federal Reserve is nearing the end of its rate-raising cycle. This brought non-yielding gold bullion up for the second week in a row. Experts interpret the markets with the latest developments and share their forecasts.
Gold prices hold a solid positive trend
Eurozone yields approached a one-month high as the focus shifted to the ECB’s tightening path. Quantitative Commodity Research analyst Peter Fertig says gold fell during the session due to the high opportunity cost of holding gold as bond yields rise.
Meanwhile, the Fed may pause raising rates in March amid the sudden collapse of two US regional banks, but inflationary pressures are seen as more important. Carlo Alberto De Casa, external analyst at Kinesis Money, underlines the following in a note:
Gold stands in a solid positive trend. Also, the first resistance zone lies between $2,070-$2,075, the historical high reached in March 2022.
After this data, gold may move towards ATH level
The dollar, which capped gold’s losses, slumped to a one-year low this week after data showed the consumer price index rose less than expected and boosted hopes for the Fed’s recession.
City Index senior market analyst Matt Simpson says investors are looking forward to US retail sales later in the day, and if the data comes out soft enough, gold could head towards its all-time high.
What we see is the first phase of the next bull cycle
Peter Spina, president of GoldSeek.com, told MarketWatch:
The move in gold prices caught many off guard, and even skeptical goldfishers can’t believe that this may indeed be the move that drove gold to all-time highs. What we’re seeing is the first phase of the next bull cycle underneath. This is a sneaky bull market move that few western investors have joined yet, but is starting to be noticed by recent price movements.
Physical market swallows rise above $2,000
cryptocoin.comGold prices found support after US wholesale prices dropped 0.5% in March, the biggest drop in almost three years. Data released on Thursday gave an indication that the Fed will further ease monetary policy in the coming months. The increase in these so-called core prices last year fell from 4.5% to 3.6%, faster than economists expected. Adrian Ash, BullionVault research director, comments on the developments as follows:
Gold’s reaction to the PPI data shows how the current rise is driven more by leveraged bets on gold derivatives fueled by hopes of Fed rate cuts rather than actual demand for bullion. But for now, “the physical market has clearly swallowed the rise above $2,000.
This situation is considered as an increase for gold prices.
The latest data revealed that the consumer price index in March increased by 0.1% and the annual inflation rate decreased from 6% to 5%. Core inflation, excluding food and energy, increased by 0.4% in line with market expectations. Gold Newsletter editor Brien Lundin states that the headline CPI data released on Wednesday is one-tenth below the consensus. Thus, “inflation has fallen once again,” he says, noting that this sign of low inflation drives up gold prices. In this regard, Lundin draws attention to the following:
That’s what’s happening in this upturned world where everything is interpreted in terms of how it might affect Federal Reserve policy. So lower inflation is considered bullish for gold, possibly encouraging the Fed to delay rate hikes.
Lundin says there are concerns about the increasing credit crunch due to stress in the banking sector. These concerns signaled a possible Fed pause at the central bank’s meeting in May and quickly caught another fire below the price of gold, according to the analyst.
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