The Gold Market has seen its biggest loss with a decrease of about 4 %since May. So the yellow metal once again entered the weekend. Analysts interpret the developments in the market and share their predictions.
Gold faces some important opposite winds
Among the gold investors, there is a hope that this sales will finally shake some of the indifferent Longs on the market. Many of them are waiting for this tremor and want to add to long -term rise bets.
However, gold faces some important opposite winds. Therefore, there is a view that this may be the beginning of a bigger movement. The biggest obstacle of precious metal is that the Federal Reserve continues to increase the interest rates aggressively.
USA NFP has come above expectations, the fears of recession have relieved
Kriptokoin.comAs you have followed from the markets, the Fed’s interest rates at the end of this month expected to increase 75 basis points. These expectations increased the US dollar to the summit of 20 years. In addition, he pushed bond returns over 3 %.
There is not much to stop the federal reserve’s determined stance on inflation. Because the US economy created 372,000 jobs in June and data exceeded expectations. Following the data showing this, the fears of stagnation on Friday relieved.
FOMC sees potential credit problems on the horizon
Even though the fears were a little subsided, they did not completely disappear. However, this will not prevent the central bank from trying to control inflation. This week, the minutes of the Federal Reserve’s June monetary policy meeting reveal that the Committee sees potential credit problems on the horizon. The participants included the following statement in the minutes:
Many participants decided that the Committee faces that the Committee faces that high inflation may become established if the public begins to question the determination to adjust the policy of the Committee as needed. The participants stressed that the appropriate tightening of monetary policy with open and effective communication would be essential to restore price stability.
“There is a supply/demand imbalance in the physical gold market”
Another issue that continues to disturb the gold market is about the futures market. Apparently individual investors are pricing from the physical market.
The US mint data shows that it sells only 44,000 ounces of gold in June, with a 76 %drop in last year. The amazing decline came with the strongest demand for the bullion. According to some analysts, there is a supply/demand imbalance in the physical market that keeps the premiums high. Analysts also say that lower prices can reset the market.
“Gold will probably follow it until the fall trend of oil ends”
Finally, investors should pay attention to oil prices while paying attention to bond returns and US dollar. It was a bad week for gold. However, the oil saw a sharper decline. For a short time, it fell below $ 100 per barrel. The oil is gently recovered, but if a stagnation is approaching, the market will be difficult to keep the current prices. Senior technical analyst Jim Wyckoff makes the following assessment:
Crude oil prices on stagnation concerns tend to decline. Therefore, gold will probably follow it until oil prices are stable and the fall trend ends. Historically high inflation must support metals. At the moment, however, the fears of low consumer and commercial demand for stagnation and metals are shadowing directions of ascension.