Gold rivals US dollar and Treasury yields rose with a hawkish US Federal Reserve stance. Investors are focused on US jobs data later in the day. Gold prices, on the other hand, are on their way to a third consecutive weekly loss in this environment. We have compiled analysts’ market comments and price predictions for our readers.
“A higher than expected data may not be good for gold prices”
Spot gold prices were up 0.31% at the time of writing, trading at $1,882.95 at the time of writing. Gold futures were also priced at $1,881.7, with a parallel increase. The yellow metal is down about 0.8% so far this week.
The dollar headed for a fifth winning week against its leading peers as benchmark US Treasuries continued to climb to the highest level since November 2018 in the previous session. Investors are now awaiting April’s nonfarm payrolls data from the US Department of Labor to assess its impact on monetary policy. Stephen Innes, managing partner of SPI Asset Management, comments:
I wouldn’t be surprised to see any other payroll data above consensus, as the market will read these tea leaves as a sign of strengthening the prospect of a 75 basis point gain at the July FOMC meeting. May not be good for bullion.
Stephen Innes: Fight the Fed, in play again
As you can follow from the news onKriptkokoin.com The Fed raised the benchmark rate by half a point on Wednesday, marking the biggest increase in 22 years. The Bank of England also raised interest rates by a quarter point on Thursday to 1%, the highest level since 2009.
Gold, which does not yield on its own, tends to fall out of favor with investors when interest rates rise. “Fighting the Fed seems to be in play again,” comments Stephen Innes, as the market returns to sell-everything mode.
“Gold prices can make some headway from here”
“Gold can make some headway from here,” says George Milling-Stanley, chief gold strategist at State Street Global Advisors. The strategist notes that investors flocked to real assets like gold as stocks tumbled as the Fed focused on taming high inflation exacerbated by Russia’s war in Ukraine. George Milling-Stanley points to the precious metal’s resilience in past Fed rate hike cycles, saying:
These tend to support gold. These are very good reasons for us to see higher prices emerge.
Wells Fargo maintains end-year target of $2,000 to $2,100
Treasury yields as investors reevaluate the potential effects of tighter monetary policy and the dollar rose sharply. A stronger dollar can be negative for commodities priced in the unit, making them more expensive for users of other currencies. Attractive Treasury rates can also dull the shine of non-yielding gold.
Gold prices showed a positive performance in the first quarter, up 6.6%, while many other corners of financial markets declined. It also managed to “hold significant support levels,” according to the Wells Fargo Institute’s second-quarter outlook, which predicted a year-end price target of $2,000 to $2,100 for gold. The bank explains:
In our view, investor focus and flows will return to the yellow metal if equity rates remain moderate and real rates remain low.
First-time jobless claims in the US rose 19,000 last week to 200,000, according to economic data. U.S. productivity fell 7.5% year-on-year in the first quarter, the biggest drop since 1947. Unit-labor costs, on the other hand, increased by 11.6% year-on-year in the first quarter.
