Gold prices started Friday with a rise with the decline in the dollar. However, it pulled back under pressure from the Federal Reserve’s signals that further rate hikes were on the way. We have compiled analysts’ gold price comments and forecasts for our readers.
“Gold prices will likely remain volatile”
Jigar Trivedi, an analyst at Mumbai-based Reliance Securities, says gold prices will likely remain volatile until clear guidance comes from the Federal Reserve. The dollar index (DXY) has given a rival safe-haven gold some respite. Taking a few steps back, DXY has made bullion cheaper for offshore buyers.
However, the dollar is still on track to record its best week in a month as hawkish statements from Fed officials and strong retail sales curbed the pullback triggered by signs of inflation softening last week. Markets are currently pricing in an 87% chance of a 50bps increase at the Fed’s December meeting. Fitch Solutions’ gold price commentary is as follows:
Gold continues to be bolstered by rising recession risks, the ongoing Ukraine war and the dollar’s peak. On the other hand, rising optimism about the Chinese economy, the risks that the Fed will increase interest rates more and more aggressively than the market expects, and the peak inflation in the third quarter will continue to put pressure on gold.
“Gold bears the burden of high interest rates”
Gold is considered an inflation hedge. However, higher interest rates and bond yields increase the opportunity cost of holding bullion. Analysts say institutional investors are cautious and it will likely be difficult for gold to gain more. Bob Haberkorn, senior market strategist at RJO Futures, comments:
Fed officials voiced the need for a further slowdown in US inflation. The market interpreted this as higher rates causing gold to be sold here in the night session. The dollar strengthened on comments that the Fed will continue to raise interest rates. Gold bears the burden of high interest rates.
Senior analyst Moya’s gold price comment is bearish
cryptocoin.comAs you follow, Fed Chairman Christopher Waller said Wednesday that he would be “more comfortable” with smaller rate hikes going forward, while St. Louis Fed President James Bullard said the Fed should probably continue to raise interest rates by at least 100 bps. OANDA’s senior market analyst Edward Moya’s comment on the gold price is as follows:
Gold prices soared after a series of hawkish speeches by the Fed reminded investors that the risks of the Fed raising interest rates above 5% were clearly there.
Louis Fed President Bullard summed up his view that the Fed may need to raise the benchmark interest rate up to 7% to put downward pressure on inflation. Moya says Bullard’s comments that the policy rate is not yet restrictive enough are “a great reminder that we need to see the labor market weaken significantly before we can price at the end of the tightening cycle.” That’s why Moya said, “It hit a golden peak. It is possible for prices to soften towards the $1,750 level,” he adds.
It will be difficult to see a sudden northward movement in yellow metal.”
Adam Koos, head of Libertas Wealth Management Group, says gold prices are suffocating. The Philadelphia Federal Reserve said on Thursday that its regional business activity indicator fell to minus 19.4 in November from minus 8.7 the previous month. Data dropped more than expected. That’s why the analyst says it’s “quite disappointing data.” However, the analyst makes the following statement:
Rates are exploding and the US dollar has been depreciating for the past few months. However, we are seeing a bounce in the dollar that could turn into a small and bigger bounce. Unless short-term trends in these two factors translate into their own headwind versions, it will be difficult to see a northward spike in the yellow metal.
Gold price interpretation of “Big Short”: It’s time to buy!
Meanwhile, Michael Burry, nicknamed “The Big Short”, says it’s time to buy gold. Burry talks about the risk of crypto contamination following the FTX crash. Burry comments in a tweet:
I’ve long thought that the time to buy gold would be when crypto scandals become contagious.
TDS gold price comment: Bitter trading in gold will expand
Gold continues to remain under selling pressure for the third consecutive day on Friday. In the view of strategists at TD Securities, further expansion of the bitter trading is possible. In this context, strategists make the following assessment:
Position risks continue to be on the upside. Therefore, we still see the risks that the painful trade in precious metals could expand further. A set of key trend reversal thresholds associated with significant shorting flow remains just north of $1,800, which marks a low bar for additional shorting. Patience pays off for those who want to wither the last rally.
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