The US central bank increased interest rates by 75 basis points in line with the expectations. The gold price fell on Thursday as the dollar rebounded slightly after that. Analysts are trying to determine the direction of gold in the light of the latest developments.
“The overall upward trend of the dollar shows a cautious outlook for the gold price”
Michael McCarthy, chief strategy officer of Tiger Brokers, Australia, says certain factors are keeping gold prices stable . Among these elements, he counts potential safe-haven demand, inflationary hedge purchases, and conflicting support flows against pressure from a higher interest rate regime.
Higher short-term US interest rates and bond yields increase the opportunity cost of holding non-interest-bearing bullion. As we reported on Kriptokoin.com , the Fed on Wednesday approved a 75 basis point rate hike to stem the rise in inflation. This increase is the largest in more than a quarter of a century. However, this development pointed to a slowing economy. Michael McCarthy comments:
Gold has been remarkably range-bound for weeks. Even with important news. It’s really confusing for traders right now to figure out what exactly will push gold out of this range. The general uptrend of the dollar shows a cautious outlook for the gold price.
“Key investors with large positions still prefer gold”
However, Brian Lan, general manager of GoldSilver Central dealership, has a different take. looking from the angle. The analyst says that key investors with large positions in gold know that the economic outlook is still challenging. For this reason, he notes that these investors still prefer to hold bullion as a safe-haven asset.
Jeff Klearman: This situation supports gold prices
GraniteShares Portfolio Manager Jeff Klearman said in a statement after the interest rate decision:
The driving force that moves gold prices is inflation expectations. Even though the Fed will take action to increase rates… Despite the 75 basis point increase in the Fed funds target rates, the uncertainty surrounding inflation expectations is a priority. As interest rates rise, expectations for a recession and falling stock prices rise. This also supports gold prices.
Gold rallied on Wednesday thanks to a weaker dollar, strategists at Commerzbank said. With the latest Fed decision overturned, the focus of gold traders and investors will mostly remain the same. In this context, the analyst continues:
It will be necessary to closely monitor inflation and economic data to see whether the measures taken by the Fed are delivering the desired results or whether adjustments still need to be made.
Gold price continues to form base, according to Peter Spina
GoldSeek president and CEO Peter Spina, says gold has “a very limited downside” from here. Spina explains:
Gold has a very limited downside here. It continues to form a strong base around these prices to continue higher towards $2,000.
Peter Spina: Gold is in the perfect place here
Analyst, gold is still at $2,000 and beyond in the third or fourth quarter this year believes he is ready for a move. In this context, he says
Global central banks will not be able to catch inflation without crashing their economies. Risks and fears are increasing. Gold is in the perfect place here to take advantage of the many issues we face.
