Gold fell on Wednesday as the dollar stabilized. However, bullion remained above the key $1,700 level as investors stopped making bigger moves ahead of US jobs data, which could affect the Fed’s policy tightening path. We have compiled analysts’ gold predictions and market comments for our readers.
“If weak employment data comes in, it’s possible for gold to break through to key resistance.
Spot gold was trading at $1,705.3, down 1.20% at press time. Bullion hit $1,729.39 on Tuesday, its highest level since Sept. 13. However, it later lost ground. U.S. gold futures fell 0.95% to $1,714.
Meanwhile, the dollar index (DXY) posted its biggest drop since March 2020 overnight. However, it later gained some stability. City Index analyst Matt Simpson states that in the case of weak ADP employment data, gold could rise above the key resistance level of $1,735. He also adds that markets are currently very sensitive to employment data.
cryptocoin.comAs you follow, a government survey showed that job deficits in the US fell to their lowest level in nearly 2.5 years in August. This implies that the labor market is starting to cool. The ADP National Employment Report is behind this data. This will be followed by closely watched nonfarm payrolls (NFP) data from the U.S. Department of Labor later in the week. Matt Simpson comments:
In the event of a miss, traders will likely receive a weak NFP on Friday. This is likely to weaken the dollar as traders get more excited about a Fed pivot and strengthen gold.
Gold forecast: Gold will rally if NFP falls weak
US Fed officials have stubbornly reiterated their commitment to contain high inflation in recent days. Gold is traditionally regarded as a hedge against inflation. However, rising US interest rates have dampened the appeal of the zero-yield asset. Gold is down 6% to date. Bob Haberkorn, senior market strategist at RJO Futures, comments on the gold forecast:
The market is sort of pricing as the Fed will pull back a bit here. So we see this movement again in gold and silver. If employment data comes out weaker than expected, gold will rally. If it comes out much stronger, the market can interpret that as well. It is possible that the Fed will continue with interest rates here.
“Prices are likely to rise in the next few days”
Lukman Otunuga, FXTM market analysis manager, makes the following statement for the gold forecast:
Gold started the last quarter of 2022 on a positive note thanks to a softer dollar and lower Treasury yields. Market speculation around the Fed, the prospect of a less aggressive approach to rate hikes, also softened appetite for zero-yield gold. Prices are likely to rise in the next few days. The outlook for the precious metal will be affected by Friday’s US jobs report.
Gold forecast: Gold is not yet out of control
Gold posted its biggest daily percentage gain since March on Monday. However, rising US interest rates increase the opportunity cost of holding zero-yield bullion. Ole Hansen, head of commodity strategy at Saxo Bank, notes:
Gold isn’t out of control yet. But at least we saw a very strong recovery. The first move was achieved with the short closing.
“These are fueling the rise in precious metal prices”
Senior analyst Jim Wyckoff says gold and silver bulls are gaining “some momentum” as prices recover after falling for six months through the end of September. In this context, the analyst makes the following comment:
Transactions so far this week have seen a weaker US dollar, higher crude oil prices, lower US Treasury yields and safe-haven demand. All of these are fueling the rise in the prices of the two precious metals.
TDS gold forecast: Drop to $1,580 likely again
Gold wisely surpassed $1,700 in extended gains. However, TD Securities strategists expect gold to reverse the recent rally towards $1,580. Strategists explain their views as follows:
The yellow metal is trading at the 50-day moving average, which we have determined should serve as the initial resistance level. If there is enough momentum to settle materially above this level, the 100-day moving average/Fib ($1,763-73) points will be an even tighter resistance zone.
According to strategists, the Fed will continue to stick to its hawkish plan to raise the Fed Funds Rate above 4.5% and keep rates in restrictive mode until inflation subsides. Strategists share the following predictions based on this:
We anticipate that gold has lost its strength and will drift towards our target of $1,580 again in the coming months. Or at least until then, inflation is likely to approach the target. This will last until 2023 or later.
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