The Federal Reserve released the minutes of its July meeting, which the market has been eagerly waiting for, on Wednesday. The minutes showed that the central bank will continue to raise interest rates to reduce inflation. After that, the dollar started to rise and the gold price fell to a two-week low. However, the yellow metal rallied slightly on Thursday. Analysts interpret the market and share their forecasts.
Kunal Shah: Gold price stuck between $1,750-1,800
Spot gold hit $1,759.17 on Wednesday, its lowest since Aug. However, it rose 0.42% to $1,769 at press time on Thursday. U.S. gold futures, on the other hand, were last up 0.35% at $1,783. Meanwhile, the dollar index (DXY) rose 0.2% earlier this week to hit a three-week high. Thus, he made his horse more expensive for buyers with other currencies. Kunal Shah, head of research at Nirmal Bang Commodities, comments:
Gold seems to be stuck between $1,750-1,800. The expectation of the Fed’s rate hikes and the cooling of inflation put pressure on gold prices. On the other hand, there is a lot of uncertainty on the geopolitical front. Therefore, it cannot cause any breakage under the combination of these factors.
Suki Cooper: The market looked at the minutes with a dovish slant
cryptocoin.com As you follow, the Fed minutes showed that the central bank is considering reducing the pace of future rate hikes in line with the slowdown in inflation. But he also noted that he saw “little evidence” that the pressures were easing. Traders are currently pricing in a 57.5% chance for the Fed’s 50bps rate hike in September and a 42.5% chance for a 75bps increase.
Indicator US 10-year Treasury rates were close to a one-month high. The gold price climbed above the $2,000 mark in early March. However, it has since dropped more than $300 (15%) due to rapid rate hikes by the Fed to ease inflation pressures. Standard Chartered analyst Suki Cooper comments:
The gold market looked at the Fed minutes with a dovish slant and prices soared. The Fed will raise 50 basis points in September and focus will shift to August CPI data and September nonfarm payrolls data to determine whether inflation is indeed slowing and labor markets are softening.
David Meger: We still see a stable Fed
The latest hawkish statements from Fed officials weighed on interest-free bullion. David Meger, director of metals trading at High Ridge Futures, said:
We still see a Fed determined to fight inflationary pressures with upcoming rate hikes. However, what is potentially at stake is the pace of upcoming rate hikes.
Jim Wyckoff: Two main factors are effective in the gold price decline
Yellow metal prices rose after the FOMC minutes in July. Senior analyst Jim Wyckoff attributes the decline in gold this week to two main factors. These are weak economic data from China and a recovery in US dollar and Treasury yields. Wyckoff explains his views as follows:
Concerns about demand for precious metals have increased after this week’s pessimistic economic data from China. Also, the gold price fell again due to growing concerns about the US and the global recession.
Rupert Rowling: This makes gold less attractive
Kinesis Money market analyst Rupert Rowling said in a market update, “Gold has made significant gains since it fell below $1,700 at the end of July. However, it sees significant resistance to climb above the important psychological threshold of $1,800. Continuing her assessment in this context, Rowling makes the following statement:
The expectation that the Fed’s future rate hikes will be less aggressive and shorter-term than previously anticipated has been tempered by the fact that further increases will still be needed. This reduces the attractiveness of a non-yielding asset like gold.
