The gold market continues to ride a wave of geopolitical fears as prices hold the new critical support above $1,900. Analysts’ forecasts for gold are that the precious metal could have further upside momentum as it becomes the commodity industry leader. Gold forecasts and market comments from master analysts cryptocoin.com compiled for our readers.
Nicky Shiels gold predictions predict bullish signal
In a note released last week, Nicky Shiels, head of metals strategy at MKS PAMP Group, says gold has outperformed the broader commodity index for the past two weeks. The analyst notes that gold prices have increased by 5.5% in the last two weeks, while the Bloomberg Commodity Ex-Precious Metals Index has increased by 1.5% and makes the following assessment:
This is largely an outlier as the market has favored all Ex-Precious’s commodities for some time now. Obviously, this is a pretty bullish signal for gold, but that’s just an angle. The key takeaway is this: Precious metals have been at a massive discount against all other commodities with the cheapest relative prices since these indexes began in 2009.
However, Nicky Shiels warns investors that the rally in the precious metal is still early and there are a few benchmarks the market must meet for the trend to continue. The analyst notes that investors are jumping into broad commodities to hedge against the threat of rising inflation and take advantage of the growing electrification trend and green energy transition.
Nicky Shiels says there needs to be a greater rotation in the commodities sector that will benefit gold and precious metals. The analyst also states that there should be more economic uncertainty and will benefit under a new crisis:
Despite the recent good performance, it still looks premature with a long-term lens (gold still technically looks boxy on a 10-year chart). But as most of the above drivers converge and the market seeks a pullback, it looks like there will be no more.
According to David Meger, it is not surprising that gold is well supported in this environment.
Gold hit a nearly nine-month high on Tuesday before pulling back for investors awaiting developments in the Ukraine crisis. Wall Street’s main indexes slumped as the West’s tough sanctions against Russia over its conflict with Ukraine kept investors nervous and oil prices hit their highest level since 2014.
People familiar with the matter tell Reuters that if Russia invades Ukraine further, the Joe Biden administration could deprive Russia of a wide range of low- and high-tech US and foreign-made goods. David Meger, director of metal trading at High Ridge Futures, comments:
Given the traditional safe-haven game, it’s not surprising to see gold being well supported in this environment.
However, David Meger states that under the inflationary pressures, the performance of the last few weeks has been a key driver of its high-trend performance, and that interest rate hikes may not overshadow this trend.
Gold is considered a hedge against inflation and political risks. However, interest rate increases, particularly by the Federal Reserve, tend to reduce the attractiveness of non-interest-paying gold bullion. Meanwhile, analysts attribute the slight pullback of gold to making some profit. Saxo Bank analyst Ole Hansen attributes this to a fairly high risk premium currently attached to the gold price.
Pablo Piovano: First contention for gold appeared at $1,880
Open interest on gold futures markets rose nearly 10,000 contracts on Tuesday, reaching a fourth consecutive daily increase, according to preliminary data from CME Group. Volume followed suit, reversing the previous daily drop, raising almost 190,000 contracts.
The pullback in gold prices on Tuesday came along with declining open interest and volume, an indication that a corrective downside could extend further in the very near term, according to market analyst Pablo Piovano. Against this, the analyst reminds that the precious metal may extend the decline to the $1,880 region (February 16 high), which will be the first area of contention.
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