Gold rallied above the key $1,800 level on Friday, posting its first weekly gain in five weeks as concerns over Omicron volatility and hot inflation led investors to safe-haven assets. The developments in the gold market, accompanied by the evaluations of 4 analysts, cryptocoin.com We have prepared for our readers.
Phillip Streible: Now the focus is on workforce data
Stocks fell, reeling from the hawkish turn of global central banks as they tried to tame rising price pressures and the economic risk posed by rising Covid-19 cases. Phillip Streible, chief market strategist at Blue Line Futures in Chicago, comments:
Growth will slow in the next quarter and US equities are correcting their highs, so it looks like a panic from equities to safe-haven assets like gold and silver.
Phillip Streible says the result of the US Federal Reserve meeting is a ‘huge cloud of uncertainty’ on precious metals and now the focus will be on labor data.
“Gold price rose as interest rate hike expectations were priced in”
On Wednesday, the Fed signaled three rate hikes by the end of 2022. This was a move that would typically weigh on the gold price, as higher interest rates increase the opportunity cost of holding non-yielding bullion. However, analysts say that the precious metal has risen as interest rate hike expectations were priced in before the announcement.
Gold rallied amid geopolitical uncertainties despite inflows in the dollar, seen as a safe store of value. But Saxo Bank analyst Ole Hansen comments in a note:
The outlook for 2022 remains cloudy, as most of the below bear market forecasts are driven by expectations of sharply higher real interest rates.
Gold price benefits from high inflation, according to ANZ analysts
Independent analyst Ross Norman expects gold to test the $1,835 level in early January, explaining last week’s rally:
The combination of real yields falling to minus one and a weaker dollar triggered this short-term rally in gold. Observers are watching to see if gold can gain any momentum in this move and it seems to be struggling to the upside.
Safe-haven gold also seemed to be taking some cues from declining risk appetite amid fears over the coronavirus Omicron variant. In a research note, ANZ analysts point out:
The gold market is benefiting from high inflation that outweighs the Fed’s hawkish stance. Physical gold purchases by large consumers are doing well.
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