Gold prices are hovering near a one-week high on Wednesday as traders pay attention to US inflation data as traders look for clues to a rate hike after the Federal Reserve chief fueled a bullion rally in the previous session. Analysts’ assessments and forecasts on the Fed’s policy stance and gold prices. cryptocoin.com compiled for our readers.
According to Ilya Spivak, Jerome Powell just lived up to expectations
“Fed Chairman Jerome Powell’s confirmation hearing did not bring any hawkish rhetoric beyond what the market is currently looking for,” DailyFX currency strategist Ilya Spivak comments. Jerome Powell said the central bank is determined to fight inflation and that a return to higher policy rates and divestment of assets is necessary to sustain current economic expansion, rather than curb job growth.
Benchmark 10-year rates pulled back and the dollar fell to its weakest level since November after Jerome Powell’s statement. Gold is considered a hedge against high inflation, but the metal is highly susceptible to high interest rates, which increases the opportunity cost of holding non-yielding bullion. Ilya Spivak comments:
In the NFP report we saw last Friday, inflation was much warmer than expected. If that were reflected in the CPI figure, I would expect gold to drop around speculation that the Fed should eventually be more hawkish than it was.
Ed Moya: Gold shorts will be pissed as long as it stays above $1,800
Kitco Metals senior analyst Jim Wyckoff said: “Jerome Powell’s not being more hawkish than expected may have calmed the bulls in the gold market a little bit.” Jerome Powell said policymakers are still discussing approaches to shrink the Fed’s balance sheet and that inflation is well above target and there is a ‘long way’ to any situation close to restrictive policy.
Ed Moya, senior market analyst at OANDA brokerage house, evaluates the situation in the market as “When Fed Chairman Jerome Powell signaled that the Fed will start to normalize policy this year, the rally in bond yields stopped and gold prices rose with the effect of it,” comments:
The longer gold stays above $1,800, the more frustrated the shorts will be.
Peter Mooses, a senior market strategist at RJO Futures, says the economic uncertainty associated with the pandemic and volatility in broader markets are also helping safe haven.
“There is room for gold to rise to the $1,830 region”
Open interest in gold futures markets rose nearly 23.6k contracts on Tuesday, the biggest single-day increase since November 8, according to preliminary pressures from CME Group. Along the same lines, volume rose by approximately 15.6K contracts, reversing the previous day’s decline.
Market analyst Pablo Piovano states that gold registered its third consecutive daily rise on Tuesday, with the sharp increase in open interest and the resumption of an uptrend in volume. However, there is room for precious metal prices to rise to the $1,830 region in the near term.
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