General weakness in the dollar outweighed high Treasury yields and expectations of US rate hikes. Despite this, gold prices remained flat on Friday. On the other hand, it’s headed for its fourth consecutive weekly earnings.
Ilya Spivak: Gold faces conflicting factors here
Spot gold was down 0.18% at $1,786.32 at the time of writing. However, it has gained about 1% so far this week. In addition, yellow metal had the longest weekly winning streak in almost a year. U.S. gold futures slid 0.28% to $1,802. DailyFX currency strategist Ilya Spivak comments:
Basically gold is facing conflicting factors here. On the one hand, we have a weaker US dollar aid. But the other side of the equation is, of course, the increase in interest rates.
Matt Simpson: It’s like the calm after the storm!
Meanwhile, the dollar is set for its third weekly loss in four. It also made gold cheaper for holders of other currencies. Data released on Thursday showed that US producer prices unexpectedly fell in July. It came one day after the news that consumer prices (CPI) remained unchanged due to the decline in gasoline prices in July. Matt Simpson, a senior market analyst at City Index, comments:
With US inflation data now behind us, it’s almost like the calm after the storm. This has led to tight ranges for currencies and commodities following the volatility experienced a few days ago.
David Meger: Gold lingers around key $1,800
San Francisco Federal Reserve Bank Governor Mary Daly said in September that a half-point rate hike was “logical.” However, she also noted that she is open to the possibility of a larger increase to combat very high inflation. Fed fund futures traders are currently pricing a 50 basis point increase in September with a 61.5% and a 38.5% chance for a 75 basis point increase. David Meger, metals trading director at High Ridge Futures, explained:
The market lowered its rate hike expectations. This weakened the dollar. Therefore, the gold key is lingering near the $1,800 level. Most of the rate hikes are already priced in the gold market. What we are trading on are differences in forward-looking expectations.
Fawad Razaqzada: Path of least resistance for gold is upside
cryptocoin.com As you can follow, the US PPI unexpectedly declined in July due to the decrease in the cost of energy products. Investors have stockpiled data showing producer inflation is on a downward trend. City Index market analyst Fawad Razaqzada comments on the impact of the developments:
Overall, sentiment remains positive. Investors are looking forward to the end of aggressive rate hikes. In this environment, upstream remains the path of least resistance for precious metals for now.
Jim Wyckoff: The next upside target for the bulls is at $1,850
The precious metal rallied as high as $1,824 on Wednesday. However, gold’s recovery over the past three weeks stalled on Thursday. Later, stocks rose sharply, the dollar pulled back and gold fell. Senior analyst Jim Wyckoff points out in a client note:
This increased the risk appetite of traders and investors last week. Also, a negative case for safe metals. The next upside target for the bulls is solid resistance at $1,850. It also fixes the next near-term price target at $1,686.30.
Marios Hadjikyriacos: There is a clash of narratives across different asset classes
In recent months, the yellow metal has typically traded against the dollar and Treasury yields. Because expectations of rapidly higher interest rates helped the matte gold shine. Marios Hadjikyriacos, senior investment analyst at XM, highlights these awe in a client note:
There is a clash of narratives playing out in the different asset classes that forex and stocks hail this consumer inflation dataset. Whereas bonds and precious metals don’t really buy it.
