Gold prices managed to regain $ 2,000 and complete the second week in a row in the positive zone. After this, it started the new week with an increase. However, analysts say gold’s momentum remains limited and prices are unlikely to break current resistance levels as the Federal Reserve continues its trend of tight monetary policy.
Only then will gold rise above $2,000 permanently!
cryptokoin.comAs you follow from , the shiny metal managed to close last week above $ 2,000. But analysts say a limited ceasefire between Israel and Hamas has weakened the safe-haven appeal of the precious metal. They also note that they expect US monetary policy to be the most important factor driving gold’s near-term price movement. Commerzbank commodity analyst Barbara Lambrecht makes the following assessment for the gold price outlook:
Our economists expect the first interest rate cut to occur only in the middle of next year. Therefore, only then can the gold price rise above $2,000 permanently.
Not much downside risk for the shiny metal
However, while gold will likely remain below $2,000, many analysts do not expect to see much downside risk as seasonal factors begin to come into play. Over the past five years, gold has gained an average of 2.7% between Thanksgiving and December 31, says Nicky Shiels, head of metals strategy at MKS PAMP, in a recent note.
The biggest risk for gold!
Ole Hansen, head of commodity strategy at Saxo Bank, says the biggest risk to gold will be rising bond yields that strengthen the US dollar. In this context, Hansen makes the following comment:
Gold prices look well supported and only a sharply rising dollar could change that. Unless a break/close above $2,010 triggers FOMO (fear of missing out), it is a bit questionable whether it is now poised to make a decisive move higher.
Gold is unlikely to break new ground anytime soon!
Intuitively, lower oil prices could provide some short-term support for gold, says Daniel Ghali, senior commodity strategist at TD Securities. Ghali notes that lower energy prices will give the Fed some room to ease the current tightening trend. However, Ghali does not expect gold prices to break new ground anytime soon. The strategist notes that Asian and emerging market demand continues to provide support for the precious metal. However, he adds, gold remains stuck as Western investors continue to avoid gold. Based on this, Ghali makes the following comment:
We expect Western investors to continue ignoring the gold market until the US enters a recession in the first half of next year, forcing the Fed to aggressively cut interest rates.
Gold is above $2,000 but resistance remains
Analysts looking at the technical outlook of gold state that investors and traders should consider the first resistance point at $ 2,010. City Index senior market analyst Fiona Cincotta points out the following levels:
If buyers make a close above $2,009, the gold price could extend its rise towards the April high of $2,050 before coming into focus at $2,082, the all-time high.
A Christmas rally is possible
On the downside, analysts highlight initial support for the gold price between $1,945 and $1,930. Phillip Streible, chief market strategist at Blue Line Futures, makes the following statement:
If we see gold prices fall below $1,940, this new uptrend will come to an end. Also, we must wait for another buying opportunity. However, I remain bullish on gold as the market appears to be bracing itself for a Christmas rally.
Next week’s data and event agenda
Meanwhile, with the renewed focus on US monetary policy, the gold market will be sensitive to US GDP and inflation data. Expectations are that the US economy will experience extraordinary growth in the third quarter. However, fears are growing that activity will slow in the fourth quarter. At the same time, experts expect slowing growth to continue to slow inflation.
Gold markets will also pay attention to a series of central bank speakers on Tuesday. Fed Chairman Jerome Powell will close out the week by participating in a fireside chat titled “Pathways to Economic Mobility” at Spelman College in Atlanta. In his recent comments, Powell was pretty clear that interest rates would remain in restrictive territory because inflation is still out of control. However, energy prices and next week’s OPEC+ meeting could be a potential wild card for inflation.
- Tuesday: US Consumer Confidence.
- Wednesday: US 3rd Quarter GDP Projections.
- Thursday: OPEC meeting. US CPE Index. Personal income and expenses. Weekly unemployment claims. Pending home sales
- Friday: ISM manufacturing PMI. Jerome Powell’s chat meeting.
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