The US dollar continues to strengthen. Additionally, US 10-year bond interest rates are above 4.5%. This harsh environment had a negative impact on gold prices. Thus, prices fell to their lowest level since March.
James Stanley: Target for gold prices is March lows
According to some analysts, the downward momentum in gold will continue. In this process, it is possible for gold prices to drop to $1,810, the lowest level of 2023. Spot gold dropped by 1.43% yesterday to $1,873.32. The yellow metal is trending sideways around these levels today. “This move has gained a lot of momentum since the FOMC rate decision,” says James Stanley, senior market strategist at Forex.com.
Selling gained momentum on Tuesday after prices fell below August lows of $1,885. March lows are now a target, according to Stanley. However, he adds that it sees some initial resistance around $1,850.
Marc Chandler: These developments reduced gold’s previous strength
The Federal Reserve expects to maintain a restrictive monetary policy for the foreseeable future even as the tightening cycle ends. Analysts state that after this signal was given, sales came for gold. cryptokoin.comAs you follow from , the Fed’s aggressive stance has pushed bond interest rates to the highest level in the last 16 years. It also pushed the US dollar to its highest level since November. Bannockburn Global Foreign Exchange General Manager Marc Chandler comments on the developments as follows:
In my view, the direction of the dollar and US interest rates are generally near-to-medium term factors. Or at least it can be understood through this lens. Simply put, the strength of the dollar, supported by rising interest rates reflecting the resilience of the US economy and the dramatic increase in supply, and hedging or liquidation by others have diminished gold’s previous strength. Many people thought that higher inflation would support gold. But higher inflation means higher interest rates. This makes the shiny, non-interest-bearing metal slightly less valuable.
Downside momentum has increased for the yellow metal
Marc Chandler expects the gold price to decline to $1,840 as the precious metal breaks below last month’s support. In this context, the analyst points to the following levels:
A warning from the Bollinger Band, where gold is trading below the lower band (~$1,895), indicates that the downside momentum is stretching. A move above $1,920 could stabilize the technical tone.
Edward Moya: Gold vulnerable to further technical selling
Edward Moya, senior market strategist at OANDA, says Europe’s weakening economy is also a major factor in the US dollar index rising above 106 points. Moya adds that it will be difficult for gold traders to dethrone the dollar as the US economy remains reasonably resilient compared to other countries. In this regard, the analyst makes the following statement:
Gold may be vulnerable to further technical selling as Wall Street continues to see a strong dollar, higher real yields and resilient economic data points supporting further Fed tightening.
Ole Hansen: The price of shiny metal will eventually rise
The gold price remains under pressure in the short term. However, some analysts maintain their long-term bullish outlook on the precious metal. Ole Hansen, head of commodity strategy at Saxo Bank, says gold needs to see a decisive break below $1,800 for its fundamental outlook to change.
Hansen states that rising energy prices combined with slowing economic growth create a stagflationary environment. The analyst expects this to eventually push gold prices above $2,000.
Phillip Streible: Now is the time to buy gold!
Phillip Streible, chief market strategist at Blue Line Futures, says he started buying gold after it fell below the August lows. Streible adds that although there is a possibility that gold prices may decline further, investors should not ignore the long-term value in the market. In this context, the analyst shares the following assessment:
Now is the time to buy gold. Because it’s on sale. It’s like going to the grocery store and seeing soup on sale. That’s when it’s time to buy. You won’t get them all, but you can start building your position.
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