Gold rose slightly on Friday, posting a second straight weekly gain on the back of the decline in dollar and US Treasury yields as fears of aggressive policy tightening by the Federal Reserve have subsided.
“Expectations are reflected in 10-year interest rates that have dropped significantly from peaks”
RJO Futures senior market strategist Daniel Pavilonis states that the Fed remains somewhat committed to its purpose and He adds that there is uncertainty about what will happen after the next two rate hikes. According to the strategist, expectations are reflected in 10-year returns, which have fallen significantly from their highs.
Indicator 10-year bond yields fell after briefly rising on strong spending data, while the dollar headed lower for the second week in a row. As is well known, gold is highly sensitive to US interest rates, as rising interest rates increase the opportunity cost of holding non-yielding bullion.
“Gold price will fluctuate between these levels”
Kriptokoin.com As we have reported, the Fed’s The minutes of the policy meeting published on Wednesday, May 3-4, drew attention to the 50 basis point rate hikes in the June and July meetings. The minutes showed the Fed grappling with the best way to steer the economy towards lower inflation without causing a recession.
On the equities side, the S&P 500 index was set for its best weekly gain since mid-March as rising earnings, strength in consumer spending and signs of peak inflation allayed concerns about a sharp slowdown in economic growth.
Kinesis Money market analyst Rupert Rowling comments on the gold price in a note:
The gold price now appears to have reached its true level and is at 1,840-1,860 until a new catalyst is found. likely to fluctuate in the dollar range.
George Milling-Stanley: Gold has room to climb further
State Street Global Advisors chief gold strategist George Milling-Stanley “High interest rates are hurting gold, even if it doesn’t fit the big, historical picture,” he says. However, Milling-Stanley thinks there is room for gold to climb further, given the sharp inflationary pressures from Russia’s war in Ukraine and higher labor costs in the US, where it expects to keep the cost of living in the 5% range over the year.
According to the strategist, this presents an opportunity for those who want to invest in gold and gold. The strategist also adds that precious metals tend to perform better when inflation stays above 5% for at least one quarter.
