The gold price slid on Wednesday from the three-month high it had seen in the previous session due to the rise in the dollar. Markets expect more clarity in the news about the Russian-made missiles that killed two people in Poland. Analysts interpret the market and explain their forecasts.
“Gold price still highly dependent on Fed”
cryptocoin.com As you can follow, spot gold hit its highest level since August 15 in the last session. It is trading near this level at press time. DailyFX currency strategist Ilya Spivak comments:
The gold price is still heavily dependent on the Fed. We can see that gold has continued to rise since its rally last week. But he couldn’t really find a massive follow-up path. Needless to say, there are also wildcard factors such as some kind of more aggressive and more urgent escalation in Ukraine. Therefore, it is possible to see that gold has become reactive.
According to analysts, there is good news for the price of six
Gold is considered a safe investment in times of political and financial uncertainty. However, rising interest rates tend to blunt the attractiveness of non-yielding bullion. Tai Wong, senior trader at Heraeus Precious Metals comments:
This is almost certainly a mistake and will be portrayed as such. However, Poland is a NATO country, so even if gold does not rise, it will keep the market tense for a while.
In a note, Fawad Razaqzada, market analyst at City Index, says that if gold manages to close above the $1,780-1,800 region, it will be another uptrend. He also notes that it will encourage more bulls to back off.
Cooling inflation data is good news for gold, according to OANDA senior analyst Edward Moya. However, the analyst says there is a strong price barrier at the $1,800 level.
What’s the latest from the CFTC’s COT report?
Gold has made some major moves in the last two weeks as prices hit a three-month high. It also stands at a striking distance close to $1,800. The precious metal is in a solid uptrend, according to the latest data from the Commodity Futures Trading Commission (CFTC). Even so, some analysts say gains may be more fragile than they appear. Because the first drive was mainly caused by the short closing.
The CFTC’s unbundled Commitments of Traders (COT) report was released Monday. Investors began to forecast more bullishness on gold. However, the weather is still extremely bearish. The latest COT report for the week ended November 8 showed money managers increased their speculative gross long positions in Comex gold futures by 9,846 contracts to 88,059. At the same time, shorts fell by 15,209 contracts to 104,405.
Gold’s net short position currently stands at 16,346 contracts, up about 51% from the previous week. The latest report shows that sentiment is still bearish. However, it has changed significantly from the highest level in the last four years. During the survey period, gold prices jumped from a two-year low of $1,618. This move broke above $1,700.
“The rally started with a short-squeeze, but…”
Analysts say that sentiment is shifting to the bullish side as prices break above $1,750 and many see $1,800 as the new short-term target. He also points out that the latest trade data appears to be backwards. Ole Hansen, head of commodity strategy at Saxo Bank, said:
The rally started with a short-squeeze. However, we expect bullish investors to take control for now.
“The sentiment has clearly changed in the market”
Commerzbank’s commodities analysts also say sentiment is likely to turn bullish as prices rose more than 4% from last Tuesday. Ole Hansen notes that gold has only seen shallow pullbacks since the rally began. Therefore, he states that the shifting momentum will likely be seen in price action as well. In this context, the analyst makes the following statement:
Sentiment has clearly changed as there is now a buy bottom mentality in the market. Gold traders on the short use the dips to close their positions.
Hansen also says that sentiment in the futures market is changing. However, he states that investors are generally hesitant to jump into gold as demand for gold-backed exchange-traded funds has been sluggish. He adds that gold bulls should follow this sector closely. He also shares the following assessment:
Sensitivity is changing. However, we now need to see long-term investors in the ETF market come to support the market.
“Gold price action is due to short-squeeze”
Commodities analysts at TD Securities say they see gold’s movement as a short-squeeze that adds risk to existing short positions. Based on this, they make the following statement:
We see a rise towards the $1,850 mark will be supported by the CTA short close, which points to continued squeeze risks below if the US dollar continues to weaken. On the contrary, CTA shorts once again set the bar higher.
“Gold price is preparing to enter the $1,575 region”
Gold fell from $2,050 in March to $1,617 in early November. Strategists at TD Securities expect gold to trade lower with further real interest rate hikes before recovering in 2023. In this context, they explain their predictions as follows:
Continued sharp rise in US real and nominal rates along the short end of the curve, we forecast gold to reach $1,575 by early 2023. It is possible for the yellow metal to start rising towards $1,800 after the first quarter as it becomes clear that the Fed is nearing the end of its tightening cycle and the market is starting to look for discounts on the horizon.
