The gold market lost another week. Markets were shocked as the Federal Reserve changed expectations. Accordingly, the FED is no longer considering the end of the interest rate hike, but its continuation at its June meeting. This situation is the opposite of expectations. So how do these developments affect the gold price? Let’s have a look at the details.
Different interpretations for gold
Kitco analyst Anna Golubova states that there is a divergence regarding the gold price. The weather on Wall Street is split over whether gold’s slump is over. Optimistic macro data and higher-than-expected inflation figures pushed markets to reprice Fed rate hike expectations. The CME FedWatch Indicator currently gives a 64% probability of another 25 basis points increase at the June 13-14 meeting.
ING chief international economist James Knightley uses a different term for the US economy. This continues to surprise skeptics, as strong spending keeps inflation too high, he says. Also, according to him, Fed hawks will want more and more rate hikes. If the debt limit discussions are resolved in a positive way, this will be a signal that there will be no increase in interest rates. In addition, Knightley states that the employment figures for next Friday are also important.
The latest situation in the futures of the yellow metal
Comex gold futures for June delivery fell $35 for the week, the most since February. June futures gold contracts opened the week at $1,979.40. Then, at the time of writing, it was trading at $1,943.90 per ounce. On the other hand, Wall Street entered a downward trend in gold last week. However, he is now split on whether gold will continue to decline or rise. 43% of 14 analysts on Wall Street were bullish when asked about their gold price expectations for the next week. At the same rate, analysts expressed a decline. Only 14% remained neutral.
On the Main Street side, the rise continued. 49% of the 762 investors surveyed expect prices to rise. On the other hand, 36% expected it to fall, while 15% remained neutral. In this context, according to previous surveys, individual investors’ expectations for a decline are still high. The average gold price target for these investors for next weekend is $1,981 per ounce. This level is about $37 higher than current levels. Many analysts are looking to technical reasons, expecting prices to be lower next week.
Analysts’ expectations
Colin Cieszynski, chief market strategist at SIA Wealth Management, said in a statement:
“Although gold has been on a downward trend lately, it does not seem sufficiently oversold or ready for a bounce. Monday is a holiday in the USA due to memorial day. After that, gold may continue to drift sluggishly for a while.”
Gold has lost more than $120 since it started trading above $2,062. However, it is still too early to see the bottom level.
“Solid trading below $2,062.90 warns of solid pressure for days/weeks,” said Michael Moor, founder of Moor Analytics. So far, we’ve seen a drop of $123.7. I am also aware that we are in the last part of the lower timeframe going down from the highs, with possible exhaustion areas to contend with as we go down from $1,937-1940, $1,929, $1,906 and $1,882.” uses the phrase.
cryptocoin.com As we have mentioned before, those who expect an increase expect the debt limit discussions to increase in the next week. According to them, this will increase gold prices. “Debt limit talks will be tough and will be postponed to an unknown date,” said Edward Moya, senior market analyst at OANDA. says.
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