Next Week Gold Price Could Hit These Levels!

Analysts say that it is not surprising that some exaggerated movements have occurred in gold as the market enters a geopolitically tense long weekend. However, the outlook for gold price remains bullish as the precious metal tests $1,900.

“There will be no immediate solution to the Ukrainian tension”

The stock market has been chaotic this week, with piecemeal updates on the geopolitical situation in Ukraine keeping investors at risk. Also, the Federal Reserve’s repricing of rate hikes to combat four years of high inflation has caused investors to abandon risky assets and embrace safe havens like gold.

Russia’s military exercises are scheduled to end on Sunday, and troop movements are the key development being monitored. By the way cryptocoin.com As we have covered in his news, US President Joe Biden is convinced that Moscow is planning an ‘imminent invasion’. All eyes are on US Secretary of State Antony Blinken’s meeting in Europe next week with Russian Foreign Minister Sergei Lavrov. Edward Moya, senior market analyst at OANDA, said in a statement:

Right now investors are struggling to deal with all these geopolitical risks, headlines and incremental updates. There will be no immediate solution to the situation in Ukraine.

Edward Moya: Flight to safety is on the rise

In addition to the geopolitical aspect, an important driver for the gold price is the economic growth concerns arising from the aggressive tightening of the central banks. Countries are finally coming out of the pandemic, but are facing very sticky inflation. Edward Moya notes that this puts the growth outlook at risk. According to the analyst, what this geopolitical story is doing is exacerbating supply chain problems, pouring extra fuel into the global energy crisis, which could lead to more aggressive central bank tightening. Edward Moya comments:

It will eventually hurt growth and this can be a boost to gold. We’re talking about an inverted yield curve (often seen as a harbinger of a recession or depression) much sooner than anyone expects. The outlook for Wall Street is changing rapidly.

When Wall Street talks about the recession, many investors worry about where the economy will be in 12-24 months. Edward Moya explains it this way:

We’re going to see a lot of investors have a pull towards cash. Flights to safety are on the rise. Even if we have a long period of uncertainty about what will happen in Ukraine, we will still see continued progress towards security. That will also be beneficial.

According to Kevin Grady, most of the gold price movements are due to inflation.

Kevin Grady, president of Phoenix Futures and Options LLC, said that the inflation argument makes gold seem very attractive to investors fleeing risky stocks and the crypto market:

Most of the price movements of gold come from the inflation story. We see that inflation has reached 7.5%, the highest level in 40 years. But if we use the same metric to measure the consumer price index (CPI) as in 1980, our inflation would be close to 15%. People understand this, so gold is finally going up.

Kevin Grady states that the Fed has no control over inflation and the energy market is facing a lot of pressure due to high demand. The LLC president points out this date to give some clarity to the outlook:

Everyone is waiting for the Federal Reserve meeting in March to see how the central bank will approach inflation.

Analysts’ gold price predictions

Gold hit its highest level since mid-June, testing $1,900 an ounce on Thursday. Edward Moya points out that there is more upside potential for gold to enter next week:

There are high risks going into the long weekend. The sense of risk has cooled and there isn’t much that can bring it back quickly. $1,930 will be the critical upside resistance level for gold. On the downside, gold has support at $1,880. Don’t be surprised to see exaggerated fluctuations in the opening as Monday is a holiday.

Kevin Grady watches two levels as resistance points from late May: $1,919 and $1,922. The analyst notes that there is a lot of general resistance above these levels and points to the following level as support:

Short-term support for gold lies at $1,881.60, the February 16 high. If this does not continue, gold could retreat to $1,845.

Kevin Grady warns that there is a risk of a pullback in gold if geopolitical tensions subside, noting that investors have seen this in part this week:

Last Friday, we saw stocks drop and gold explode after the US warned that Russia could attack Ukraine any day. Then on Monday, as tensions subsided, we reversed. Then the cycle was repeated once more.

Macro data to follow next week

On the data front, markets will be looking at Fed speakers after they cut their 50 basis point rate hike expectations back to 33% at the March meeting, according to the CME FedWatch Tool. Regarding next week’s agenda, ING FX strategist Francesco Pesole says:

There are several hawkish voices (Bostic, Mester and Waller) on the Fed speaking agenda for next week. These could reinvigorate rate hike speculation and help further put a base below the dollar.

1. Tuesday: Manufacturing PMI, CB consumer confidence, Atlanta Federal Reserve Bank Chairman Raphael Bostic speaks
2. Thursday: GDP Q4, initial jobless claims, new home sales, Cleveland Federal Reserve Bank President Loretta Mester speaks
3. Friday: PCE price index, personal spending, durable goods orders

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