Gold prices closed Friday with rising. The move helped the yellow metal clinch its fourth straight week gains. It also contributed to the rally that started late last month after the Federal Reserve announced its latest rate hike. Analysts interpret the market and share their forecasts.
Bart Melek: Gold finds support from lower interest rates
Spot gold rose 0.69% to $1,802.3 on Friday. With this move, he earned more than 1% weekly. U.S. gold futures, on the other hand, were up 0.46% and were last traded at $1,815.5. Bart Melek, head of commodity strategy at TD Securities, said:
Currently, the gold market is closing some short positions. It also finds support from lower interest rates.
“Rally for gold, so it stopped”
Investors are now assessing whether a marked slowdown in inflation increases could dampen the pace of Fed rate hikes. In this environment, US Treasury rates fell after a volatile week. Data released earlier this week indicated that inflation in the US has cooled. It then showed market participants lowering their expectations for an aggressive rate hike by the Fed. However, recent Fed comments remain hawkish. Bart Melek makes the following assessment:
After cold CPI figures, gold’s rally stalled as the market believed inflation would continue to be a problem. Fed speakers also claimed that they could not give up the fight against inflation.
Ole Hansen: Increased risk appetite thwarted yellow metal
As you know, bullion tends to do well in a low-interest environment, as it does not generate interest. Saxo Bank analyst Ole Hansen comments:
We see that the risk appetite has increased in rising stocks and bond yields. This has so far prevented the yellow metal from making a decisive challenge at the key resistance above $1,800.
Craig Erlam: Gold could find support if risk appetite wanes
Meanwhile, higher domestic prices limited physical gold demand in India this week. In addition, the uncertainty regarding the developments regarding Taiwan continues. This, in turn, has led bullion importers in China to stop large purchases. OANDA analyst Craig Erlam comments on the impact of recent developments on the market:
A slight easing in inflation helped gold rise to $1,800. However, risk assets were quickly preferred. Therefore, the rise of gold stopped. If risk appetite subsides in the next few weeks, it is possible that this could support a move above $1,800.
Commerzbank: Tightening still brakes gold
Fed’s Mary Daly said on Thursday that a half-point rate hike in September was “logical”. But she added that she is open to the possibility of a larger increase. In a note, Commerzbank underlines:
Continuing tightening in monetary policy still has a brake effect on gold. Market participants remain accordingly cautious. Recently, they have been withdrawing funds from gold ETFs.
BCA Research: Gold balanced between these
cryptocoin.comAs you follow, the yellow metal gained weekly even as the dollar climbed on Friday. In a customer note Friday, BCA Research analysts point out:
Rising real interest rates and the strengthening US dollar created strong headwinds for bullion in the first half of the year. Thus, it offset the headwinds from rising inflation and rising geopolitical risks.
“As long as these continue, gold will continue to rise”
However, the dollar has fallen 3% since mid-July. Also, US inflation fears on Wall Street eased. In this environment, 10-year TIPS rates declined. Among all this, gold prices have increased by 5.7% in the last three weeks. According to the BCA team, the appeal of safe-haven assets remains, given the still extremely high geopolitical risks. In this context, analysts make the following prediction:
As long as the latest trends in the dollar and real interest rates continue, gold will continue to rise.
Rupert Rowling: Fed may limit gold’s potential
The most active gold contract recorded the longest weekly gain since December 31, 2021, according to Dow Jones Market Data. It also closed the fourth consecutive week higher. However, according to Rupert Rowling, market analyst at Kinesis Money, the upside potential of the precious metal is likely to be limited by the Federal Reserve.
Looking ahead, investors will be waiting for the Federal Open Market Committee’s (FOMC) minutes, which are expected to be released next Wednesday.
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