Gold prices rose amid economic uncertainty, including the US debt ceiling dispute. Traders are gearing up for inflation data that could affect the Federal Reserve’s interest rate strategy. Analysts interpret the market and share their forecasts.
The gold market is currently in ‘wait and see’ mode
Spot gold rose 0.5% to $2,030.91 on Tuesday. U.S. gold futures rose 0.3% to $2,039.60. Kinesis Money external analyst Carlo Alberto De Casa says gold will likely consolidate around $1,980-$2,060 in the short term, although the Fed’s rate cut prospects are “a little too optimistic and premature.”
In addition, De Casa states that the markets are in ‘wait and see’ mode for now. Because the US consumer price index (CPI) data to be announced on Wednesday has the potential to affect the Fed’s interest rate decision. Fed Chairman Jerome Powell said last week that policy decisions will be data-driven. However, it pointed to a possible pause in the rate hike cycle. After that, investors are currently pricing in the 85.7% probability that the US central bank will hold rates steady in June.
A Gold will likely stay above $2,000. k
Investors are also watching developments in the country’s banking sector and the debt ceiling. On the other hand, stock markets fell on Tuesday as the latest developments made investors nervous. However, Commerzbank analyst Carsten Fritsch said in a note that there is no room for the Fed to cut rates this year and gold will likely stay above $2,000.
In this case, we will see gold move to $2,100!
Ajay Kedia, director of Mumbai-based Kedia Commodities, says that gold prices will fall to $1,950-1,920 levels if the inflation report is hot and the Fed’s concerns that a new interest rate hike will be fueled in June.
Meanwhile, according to the New York Federal Reserve’s report, inflation expectations of US consumers followed a mixed course in April. Along with economic data, market participants also monitor developments regarding the country’s banking sector and debt ceiling. Monday’s Fed survey data was the latest indication that high interest rates are starting to affect the financial sector. “It is possible that there are reports of more stress in the banking sector. In this case, we will see gold move towards the $2,100 level,” he says.
These bode well for gold investment demand.
cryptocoin.com As you can follow from , the expectation that the Fed will suspend interest rate hikes supported the demand of gold investors. Economists at ANZ Bank expect the yellow metal to remain strong. In this context, economists make the following assessment:
Resurgent concerns about US banking stress, slowing economic growth and rising geopolitical tensions bode well for gold investment demand. Increasing expectations that the Fed will begin to cut interest rates are another supportive factor. We see investors creating long positions in gold futures and ETFs. The physical market is also showing some resistance to higher prices.
Looks like gold wants to run towards record levels once again!
The gold market is holding above $2,000. However, it is struggling to find new momentum after the hard sell-off last week. However, the tighter market conditions highlighted in the SLOOS on Bank Lending Practices may provide some support in the near term, according to some market analysts.
Some eonomists state that the survey in question is not an important report with much follow-up. However, many had been waiting for this report to gauge how badly the crisis had affected the banking industry. Looking ahead, the survey also shows that banking officials are expecting a tough year. Edward Moya, senior market analyst at OANDA, describes the report as a “festival of procrastination that confirms the economy’s grim outlook.” Based on this, Moya makes the following comment:
This important survey supports the recession forecasts for the third quarter…Gold looks like it wants to run towards record highs once again. There is too much recession risk on the table for gold to experience a significant pullback. Gold may be stuck in a range until it receives the important inflation report.
The yellow metal is trapped in between
Huw Roberts, head of analytics at Quant Insight, says he will pay close attention to the Senior Loan Officer Survey as it could push gold out of the current neutral price action. Roberts states that gold is stuck between the Fed’s aggressive monetary policies and the weakening economy. He adds that tighter credit terms often support higher gold prices.
