Commodity prices are on the rise with a surprise U-turn this week. Therefore, silver and gold rose to 3-month and 3-week highs, respectively. There is only one question in the minds of investors now. Is this a sustained rally or just a short rally? Professional analysts shared their predictions for those who are curious about the answer to this question.
Silver and gold rising
cryptocoin.com As we reported, Silver outperformed gold this week. Still, both precious metals performed impressively. Meanwhile, there were some prominent factors behind the rise. Among these, the weakening of the US dollar was the most important factor. In addition, falling US Treasury yields, high crude oil prices and the change in the expectations of FED interest rate hikes also contributed to the rise. These fluctuations in the global economy led investors to the historical safe haven gold.
“Over the last five days, Gold has seen vicious returns, up 5%, Silver 14%, Platinum 9% and Palladium 11%,” said Nicky Shiels, metal strategist at MKS PAMP. Meanwhile, the United Nations made a speech this week. Accordingly, the UN called on the Fed and other central banks to ease the rate hikes. He also warned that tighter monetary policies are pushing the global economy into recession. “There is still time to step back from the brink of recession,” UNCTAD Secretary General Rebeca Grynspan said.
“Expect a breakout at this level”
Gold is up around $65 this week. December Comex gold futures were last trading at $1,733 an ounce. Meanwhile, silver rose about $2.25, and futures held at $21.10. As a result, there was a significant technical return in gold this week after six months of losses. Lukman Otunuga, senior research analyst at FXTM, spoke on the subject.
“The rumors that the FED will adopt a less aggressive approach in interest rate hikes have revived the demand for gold in the markets,” Otunuga said. He then shared his price predictions. According to him, the drawing suggests a break above $1,700. This breakout is likely to lead the price to climb to $1,724 and $1,760, respectively. However, Otunuga does not rule out the possibility of the price breaking below $1,700. If that happens, the next key support levels are located at $1,680 and $1,655.
“Price increase is temporary, be careful”
Unlike Otunuga, some analysts say the price rise is temporary. According to these analysts, the latest rise is just a short squeeze. Bart Melek, head of commodity strategy at TD Securities, is one of them. Melek says that gold has lost momentum and will fall again to $1,580 in the coming months. He bases his thesis on his prediction that the FED will continue to stick to its hawkish plan to raise FED funds above the 4.5% mark.
Therefore, Melek says that rates on the short end of the gold price curve will likely continue to rise from current levels. According to him, rates will remain at the aforementioned levels for the 2023 balance. In addition, Melek expects real rates, which is the main driving force of gold, to rise even faster. According to him, the increase in these rates will increase the transportation costs and opportunity cost.
“Wait for these developments for gold”
“It’s too early to talk about the Fed’s prospects,” says Edward Moya, senior market analyst at OANDA. But he adds that a drop in unemployment data, which is expected to be released on Friday, is significant. According to him, if we continue to see a few sharp drops in the data, this will increase the Fed’s dove rhetoric. However, Moya states that the key to gold will be the non-farm payroll report. “Unless we see extraordinarily strong pressure, gold should remain supported here,” he says, targeting the $1,750 region.
