Gold prices continue to recover with more than 3% weekly gains. According to market analyst Diego Colman, the fall in US Treasury rates is likely to support interest rate sensitive assets in the near term. Christopher Lewis, on the other hand, states that the gold markets are having a bull week. We have compiled the gold forecasts and technical analysis of analysts for our readers.
Gold forecasts rise as Fed’s hawk weakens
Gold has rallied strongly over the past ten sessions, after bouncing the cluster support at $1,690/$1,675 earlier in the month. In recent days, he has accelerated his recovery. A weak US dollar has supported the precious metal this week. However, it mostly found support from low bond yields after the Fed’s latest decision and guidance.
Chairman Powell’s comments after the FOMC meeting in July were perceived as a sign that the Fed’s summit hawk had passed. Therefore, the 2-year rate fell to the lowest level in almost a month (2.84%). Thus, Treasury interest rates retreated sharply. For context, Powell said, another unusually large increase will depend on the data. In this context, he suggested that policy makers may slow the pace of the tightening cycle in the future.
cryptocoin.comAs you can follow, AD CPI reached the highest levels in forty years. However, it is likely to start rolling in the coming months due to falling commodity prices, including in the energy sector such as oil and gasoline. This, in turn, resulted in a sharp decline in market-based measures of expected inflation. All this combined can help reduce the need to forcibly withdraw the compromise. Analyst Diego Colman comments:
Fewer increases on the horizon are likely to support the rise of gold. Another catalyst that could further bolster gold is the decline in US trade activity. US gross domestic product contracted again in the April-June period for the second quarter in a row, increasing the likelihood of a hard landing.
Gold forecasts: It is possible for gold to thrive in this environment
The US economy is on the verge of recession by some measures. In this environment, Fed officials are likely to adopt a more dovish stance later this year. The analyst says that the softening of data from the macro front will lead traders to prepare for this scenario. He also notes that the yellow metal is likely to strengthen its appeal in the near term.
Looking ahead to the week ahead, there are several high-impact events on the calendar that are worth watching, including ISM production, ISM services and labor market data. All these reports are likely to show a further slowdown in economic growth, according to the analyst. The analyst states that this is a result that may increase the risk of a recession. So, he says, it is possible for gold to thrive in this environment.
Gold prices technical analysis
Market analyst Diego Colman illustrates the technical outlook for gold as follows. Gold prices fell aggressively from 2022 peaks set in early March. In recent weeks, however, it has started to recover without falling below a key technical base in the $1,675/1,690 area, where the 38.2% pullback of the 2015/2020 rally is aligned with long-term trendline support and several 2021 lows.
If the bulls take control of the market in the coming days, the initial resistance will be at $1,785. Then it appears at $1,835. With more strength, focus shifts upwards to $1,880. On the other hand, if the sellers re-emerge and trigger a bearish bias, the first support to consider comes at $1,690/1,675. If this area is breached, it is possible that we could see a move towards $1,615.
Gold forecasts: Gold markets are having a bull week
Market analyst Christopher Lewis, on the other hand, draws attention to the following issues in his gold technical analysis. Gold markets have rallied considerably throughout the week as we are determined to threaten the $1,800 level. The $1,800 level is a relatively important area based on the previous support. So it should bring quite a bit of ‘market memory’. In this phenomenon, there should be a lot of orders waiting to be included, perhaps pushing the market back.
On the other hand, if we turn back and continue higher, the $1,800 level is likely to struggle strong. If we break above the $1,800 level, it is possible for the market to face the 50-Week EMA, which is right at $1,832. Frankly, this would be true, with a big sell-off in returns. So he would see assets everywhere moving against the dollar.
Position recommendations for gold
I believe it’s more likely than anything else that we’re seeing too much noisy behavior. Therefore, when this is the case, you need to be very careful in your position dimensions. If the market turns against you, you need to exit quickly. Because it will continue to be very volatile going forward.
The next few weeks are likely to be a little crazy. That’s why you need to pay attention to yields more than anything else, as they seem to be running everything right now. Position sizing will be very important. Due to the large amount of volatility we’re seeing in GDX, you need to make sure you’re not taking too much risk at any given time.
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