Gold’s appeal waned with a stronger dollar and more US rate hikes on the horizon. Thus, the gold price realized the longest decline since November last year. The yellow metal fell for the fifth straight session on Friday. Analysts interpret the market and share their forecasts:
“The main factor suppressing the gold market is the resurgent dollar”
Spot gold fell 0.69% to 1,746.31, falling to its lowest level since July 28. U.S. gold futures were last traded at $1,762.9, down 0.47%. After posting gains in the previous four weeks, gold has lost 2.9% so far this week. Thus, it recorded the biggest decrease since the week of July 28. Senior analyst Jim Wyckoff comments:
The main factor suppressing the gold market is the resurgent dollar. Gold and dollars compete as safe-haven assets. Higher US interest rates indicate a stronger dollar. This will cause gold to drop further.
“Next important support for gold price is at $1,700”
cryptocoin.comAs you’ve followed on , the dollar index (DXY) rose and posted weekly gains. A stronger dollar makes gold less attractive to offshore buyers. Meanwhile, a number of Fed officials said on Thursday that the Fed must continue to raise interest rates to contain high inflation. In a note, Kinesis Money market analyst Rupert Rowling underlines:
Reality checks on the trajectory of future Fed rate hikes brought a sudden return on gold’s attempts to climb above $1,800. Traders will look below $1,700 as the next major support.
“A lot can change before Fed’s September decision”
OANDA senior market analyst Craig Erlam says gold has shown some resistance at times over the past week. However, if the dollar rally declines, it could be capitalized quickly. According to the analyst, the recovery in the dollar put heavy pressure on the yellow metal.
Several Fed officials said the Fed should continue to raise interest rates to contain high inflation. Craig Erlam says investors will focus mainly on the annual Jackson Hole economic symposium, employment data and inflation ahead of the next Fed meeting. In this context, according to the analyst, given how the year has gone so far, it is possible that a lot can change before the September decision.
“It is difficult for the Fed to give up, given high inflation”
Quantitative Commodity Research analyst Peter Fertig says the market is pleased to expect the Fed to slow interest rates and begin easing in the first half of 2023. However, he adds that this is absurd when considering high inflation.
“Demand increases if there is a perception that the gold price is approaching the bottom”
Insignia Consultants research director Chintan Karnani says that if gold trades below $1,750, it’s possible to sell more on Monday. The analyst makes the following statement:
Physical gold demand in Asia will need to see a massive spike next week for gold prices to reverse and retest $1,800. Demand will only increase when there is a perception that gold prices are about to bottom out.
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