Gold price managed to climb above $1,700 after the dollar lost slander. According to some analysts, rising recession fears continue to put pressure on risk assets. In this environment, the gold market also benefits from the safe haven demand.
“Gold price has gained a new momentum above 1.680”
cryptocoin.comAs you can follow on . December gold futures were last traded at $1,712. Ole Hansen, head of commodity strategy at Saxo Bank, points out that gold’s rise above $1,680 creates new momentum for gold. He also notes that a collapse in the crypto markets has contributed to gold’s safe-haven appeal.
Some analysts see Tuesday’s move as a continuation of Friday’s short-term rally, with trading data from the Commodity Futures Trading Commission showing bearish speculative positioning near four-year highs. But other analysts say the rally may reflect a shift in market expectations as the threat of a global slowdown increases.
“This situation helps for the gold price”
Meanwhile, the inverted 2-year/10-year yield curve remains a key recession indicator for many economists and market analysts. Daniel Pavilonis, senior commodity broker at RJO Futures, talks about growing recession fears. He says some whispers on Wall Street point to weaker-than-expected inflation on Thursday. Currently, markets expect the US CPI to rise 7.9% year-on-year. This means positive data for the gold price.
Expectations for softer inflation figures also change the outlook for the Fed’s December monetary policy decision. According to the CME FedWatch Tool, markets see about a 57% chance for 50bps movement next month. Daniel Pavilonis comments:
Markets are predicting that the Fed will slow the rate of increase in the next year. That’s why bond yields seem to want to fall. This puts pressure on the US dollar and helps gold prices.
“When that time comes, gold and bonds will be the best investments on the market.”
The US dollar index fell below 110 points, trading near a seven-week low. The gold market saw some significant gains from last week’s two-year low. However, many analysts note that prices have entered neutral territory. Many analysts say that gold must rise above $1,735 before it gains sustained bullish momentum.
Some analysts are warning investors not to follow the market as the Fed maintains its aggressive monetary policy stance. Philip Streible, chief market strategist at Blue Line Futures, explains:
When the Fed finishes raising interest rates, gold and bonds will be the best investments on the market. But we don’t know when the Fed will end.
“The biggest warning fee increase for the gold price”
Pavilonis adds that although market expectations change, inflation will easily bounce back if it is hotter than expected. In this context, he comments:
The biggest warning for the gold market remains the wage increase. Because that will determine how sticky inflation will be. If inflation is to be quite sticky, the Fed will need to maintain its aggressive stance longer than expected.
“Gold is very cheap compared to almost all other investments”
The gold market has jumped nearly $100 from the two-year low it saw last week. Investors may be starting to realize the precious metal’s value, according to Dennis Gartman, chairman of the University of Akron Endowment Committee and former publisher of the Gartman Letter. Gartman says gold’s recent drop to $1,618 is a key move that creates a solid value game for investors. Based on this, he makes the following statement:
I think gold is very cheap compared to stock prices at this point. Gold is very cheap compared to almost all other investments. He wants to go higher than these levels.
“I pay attention to the long-term potential of the yellow metal!”
Hedge funds and other major investors are staying away from gold as prices plummet over the summer. Gartman notes that individual investors are a group that benefits from lower prices. Also, Gartman says, “The fact that central banks are aggressive gold buyers on the downtrend shows where the value is in the market.”
Gartman is very optimistic about gold for most of 2022. It doesn’t matter to Gartman whether gold’s latest rally is the start of a new uptrend or another bustling short-lived rally. He says he’s been paying attention to the long-term potential of the yellow metal.
“Gold market will continue to benefit from safe-haven flows”
Dennis Gartman states that the Fed will continue the process of raising interest rates, which has created a challenging environment for gold. However, he also notes that he doesn’t think the Fed can eventually get inflation under control and bring it back to 2%. Gartman adds that he expects the Fed to bring interest rates to 5% or 5.25% this tightening cycle. However, he also says he will not ignore the increase in the Fed Funds rate. Finally, Gartman comments:
The Fed’s balance sheet is $8.5 trillion, and they get $95 billion a month. It will take years for them to get all that liquidity out of the market. Inflationary pressures will continue for a long time to the benefit of the gold market. At the same time, the gold market will continue to benefit from safe-haven flows.”
Critical levels for gold price
Market expert İslam Memiş also evaluates the gold market in the light of the latest developments. Memiş states that he sees gold as an ideal long-term investment. Next, the expert draws attention to the following levels that the ounce gold business considers critical:
For now, we see the levels of $ 1.670-75 an ounce. In general, your reactions come from the 1.620-1,680 band on the charts. The movement, which started at $ 1,630, is in the band range of $ 1,676 above and $ 1,616 below. Gold has generally been moving in almost the same band since mid-October.
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