Investors are waiting for the minutes of the latest policy meeting that will provide clues to Federal Reserve’s interest rate hike. Fed minutes will be announced at 21.00 TSI. In this environment, gold stuck in a narrow transaction range on Wednesday. Analysts interpret the market and share their predictions.
How will the Fed minutes affect gold?
Spot Gold is traded for $ 1,737.79 with a decrease of 0.1 %during the press time. The US gold futures remained at a slightly $ 1,738,20. Craig Erlam, Oanda’s senior market analyst, says that gold has been “a little correction” after approximately 10 %gains in the first half of November. In addition, the analyst makes the following statement:
However, if the minutes indicate that more policy makers support slowing down the tightening rate from December, it is possible to have an upward catalyst for gold.
“There is some tension in the market before the fed minutes”
The FED will announce the minutes of the 1-2 November Policy Meeting at 21.00. Meanwhile, US durable goods data and the first weekly unemployment applications are on the radar of investors. “There is some tension in the market before the Fed minutes, Ed says Ed & F Man Capital Markets analyst Edward Meir. Analyst also makes the following assessment:
In the short term, I expect gold prices to be a little higher than the end of the year. Because I expect the dollar will weaken a little. In addition, we are very close to the summit in inflation and interest rates.
“Currently there is a direct correlation with interest rates”
At the beginning of this month, the US Federal Reserve made an interest rate hike of 75 BPS for the fourth time. Kansas City FED President Esther George said on Tuesday, Fed’s consumer demand to successfully soften and reduce high inflation to a higher level of raising interest rates and said it may need to keep it at this level for longer. RJO Futures Senior Market Strategist Daniel Pavilonis makes the following comment:
I think the metals stand out and continue to rise. However, there is currently a direct correlation with interest rates.
“Fed will probably be attached to the scenario for a while”
Kriptokoin.comAs you have followed, Cleveland FED President Loretta Mester said that the Central Bank could go to smaller interest rate hikes from next month on Monday, while San Francisco Fed President Mary Daly said that the policy interest is “a little restrictive ve and was“ more work to be done ”. Oanda’s senior analyst Edward Moya underlines the following in a note:
Gold received some support from the weak dollars. However, it seems to be decreasing rapidly. Fed will probably be attached to the Sahin scenario for a while. In addition, if we do not see a major development in the case of Covid in China, gold will have to fight for a significant rally.
“Gold will only return to the north of this situation”
Gold is traded at $ 1,737. Economists in Commerzbank do not expect yellow metal to show a permanent recovery until the first quarter of next year. In this context, economists make the following statement:
Since the US dollar finished the weakness phase, the gold price has fell sharply. The latest cooling in US inflation has reduced excessive fears of inflation, and thus the Fed’s more pronounced interest rate hikes than ever. However, it is clear that the Fed has not yet finished tightening the monetary policy. After all, 7.7 %inflation is still far from its 2 %target.
According to economists, gold will make a permanent return only if interest rate hikes end. Economists predict that this will probably be the case in the first quarter of 2023. Regarding the recent increase, economists record the following:
The last increase in the price of gold was largely caused by Short closure. The latest CFTC data for the latest reporting week revealed a shift to speculative net long positions. Therefore, this price guiding factor has now disappeared.
“Gold will continue the fall trend”
The price of gold made a strong return from the $ 1,620 lock support. However, the strategists in Anz Bank expect gold to fall below $ 1,700 again. They explain these views as follows:
In order to verify the tendency to rise underneath, prices will be very important for the $ 1,800 resistance. The markets are waiting for the Fed to increase 50 BPS in December. In addition, the inflation remains well above the target range. Therefore, we think it would be difficult for gold to break this resistance before this year. We expect gold to receive support for $ 1,700. However, the yellow metal is likely to test $ 1,620, an important support level in the recent term. In addition, it can open the door to break $ 1,620, potentially to fall below $ 1,600.
“October CPI figures delete the downward potential below”
Gold increased by 3.9 %per week after the US CPI report was softer than expected. According to the strategists in Socété Générale, this relieved the downward pressure on the yellow metal. Strategists make the following assessment:
One of the spectacular activities was gold with a bull flow of 7.4 billion dollars. The main reason for this is $ 6.1 billion. The streams reacted to the announcement of the US -Clerk CPI figures on November 10 for October, which was lower than the market predicted. Low inflation is traditionally downward for gold. However, the market sensation seems to focus on the Fed’s slower interest rate hikes or an earlier return to pigeon policies.