On Tuesday, gold prices declined when market participants waited for the US Central Bank’s policy decision tomorrow. However, the yellow metal is constantly on the way to the third month earnings. Analysts interpret the market and share their predictions.
Fed and Chinese effect on gold prices
Spot gold fell to $ 1,907.5 with a decrease of 0.8 %during the press time. However, it is on the way to an increase of more than 4 %per month. The US gold futures decreased by 0.86 %for $ 1,922.5. Meanwhile, the dollar index (DXY) remained constant, but the fourth month decrease was set in succession.
Kriptokoin.comAs you have followed, investors expect the Fed to reduce interest rate hikes to 25 basis points (BPS) at the end of the two -day policy meeting on Wednesday. The US Federal Bank reduced its tightening rate to 50 basis points in December after four rising 75 basis points in a row. Ajay Keda, Director of Keda Commodities in Mumbai, makes the following assessment:
Prices are traded in a narrow range before the Fed meeting. The gold market has already priced 25 basis points. If the Fed pigeon hits a ton, then it will be positive for gold. With the recovery of the Chinese economy, the demand for physical gold in China will develop. It will also support other valuable metals that are industrial.
“Gold prices rise in this scenario!”
Michael Langford, Director of Airguide, a corporate consulting company, expects gold to trad between $ 1,900 to $ 1,925 next week. RJO Futures senior market strategist Daniel Pavilonis says the way the FED tells this story will be reflected in the gold market. In this context, Pavilonis makes the following statement:
The larger picture here is that if the Fed ratios slows down, inflation comes back by roaring. If the Fed stops a little and the inflation is still there, I think that gold will rise in this scenario.
“Fed’s hawk surprise may cause a decline”
The US consumer expenditures, which are the inflation indicator preferred by the FED, fell for the second time in December and put the economy into a lower growth path towards 2023, and the expectations of slowing down interest rate hikes increased. However, the number of applicants for unemployment salary continues to decrease. This signals a strict labor market that can force Fed to increase interest rates. CMC Markets Chief Market Analyst Michael Hewson, the following estimate:
Fed’s hawk surprise may cause gold prices to decline to $ 1,900 in the short term.
“Powell doesn’t like the stock market continues to rise”
Gold has increased by 17.7 %in the last three months and a hundred 5 %since the New Year. However, when the Federal Open Market Committee (FOMC) is collected on Tuesday to decide on the interest rate hike, the Fed President Jerome Powell is vulnerable to the withdrawal of gold, since it is ready to adopt a hawk discourse in the press briefing that day. This is the assessment of Adrian Day Asset Management, the president and CEO of Adrian Day Asset Management. Day continues to evaluate in the following direction:
I think the market is vulnerable to withdrawal, as the market increased by 25 basis points and a pause in March. Powell doesn’t like the stock market continues to rise. This means that the stock market does not take it seriously… His motive is to come out and say something strong. This, ‘FED will continue this. Inflation will continue to work until it is eaten, ‘will be.
“Gold prices will go to record levels, but…”
Stock markets have really risen this year, as S&P increased by 6 percent since the beginning of the New Year. Day, Powell’s hawk discourse and underestimates the idea of a pause, the price of the gold can temporarily reduce the price of $ 1,900 warns. However, in 2023, gold continued to rally and estimates that it would ‘overcome the highest of the previous times. He says he’s in a ‘exceptional rise’ about gold. He explains his views on this subject as follows:
The fact that interest rates are rising, but the market believes that the Fed will not continue to increase interest rates. I think gold will exceed the highest level of all time this year. There is little doubt about this.
However, Day, Fed’s interest rates above expectations, if it continues to increase the gold market ‘rail’ he adds.