The gold market regained an important psychological level as prices climbed above $1,850. According to analysts, the precious metal is finding new bullish momentum as the US dollar sees more selling pressure.
“Direction change in dollar may stop gold rally”
Swissquote Bank senior analyst Ipek Ozkardeskaya states that the gold market has regained its technical upward momentum as prices climbed above 200-day moving averages. However, he adds that investors should continue to monitor US dollar and bond yields. The analyst makes the following assessment:
The recent pullback in the dollar and US interest rates is what supports the higher valuation in gold since last week. Therefore, any change in direction and preliminary yield on the dollar could stop the rally.
The analyst also notes that if gold’s momentum holds, he sees the potential for prices to test the resistance between $1,875 and $1,880.
Analysts diverge on dollar
As you can follow from Cryptokoin.com news, US Dollar, Europe It lost ground Monday after Central Bank Governor (ECB) Christine Lagarde revealed the central bank’s way of normalizing monetary policy. Some analysts say Lagarde is laying the groundwork to raise interest rates in July. Ipek Ozkardeskaya comments:
With the inflation outlook shifting significantly higher compared to the pre-pandemic period, adjusting nominal variables is appropriate, including interest rates. This does not mean tightening monetary policy. If we see inflation stabilize at 2% over the medium term, a gradual further normalization of interest rates towards neutral would be appropriate. However, the speed and overall scale of the adjustment cannot be predetermined.
Some analysts warn that the US dollar has more ground to lose as the monetary policy gap between the Federal Reserve and the ECB begins to narrow. However, some analysts still expect the US dollar to continue its upward trend as interest rates will be higher compared to Europe.
“This will increase safe-haven demand for gold and dollars”
Monetary strategists at Brown Brothers Harriman We see it as a correction in the dollar futures rally, but we are surprised at the dollar’s decline since early May,” commented
However, some analysts suggest that both the US dollar and gold rally together, particularly as equity markets remain volatile. sees the place. But many analysts predict further weakness as corporate earnings face inflationary headwinds and growing recession fears. Phillip Streible, chief market strategist at Blue Line Futures, said:
Equity market conditions could get much worse. There are signs that economic conditions in the US are starting to deteriorate. This will increase safe-haven demand for gold and dollars.
“Weak dollar helped gold’s rise”
Despite Tuesday’s break, the safe-haven dollar is still priced in by the Federal Reserve. It is broadly falling from multi-year highs along with the decline in Treasury yields, with aggressive easing. City Index senior market analyst Matt Simpson comments:
The weaker dollar has helped push gold above its 200-day average and we are not yet convinced that the dollar has hit lows.
Matt Simpson: Gold continues to appear oversold
Kansas City Federal Reserve Bank Chairman Esther George, US central bank’s target He said he expects to raise the interest rate to about 2% by August, and that further steps depend on how both supply and demand affect inflation. Matt Simpson says:
Gold continues to look oversold and the daily close above the 200-day average on Monday is constructive for the bulls.
Tim Hayes: Gold price uptrend may be short-lived
Gold futures, four weeks in a row, without pullback in dollar It closed with modest gains on Monday after the catch. According to a team led by Tim Hayes, global investment strategist at Ned Davis Research, gold’s uptrend may be short-lived as the yellow metal trade stays below its 50-day moving average of $1,914.76.
Hayes said in a client note Sunday that continued strength in the dollar could push gold down from neutral to bearish.
“In this case, it will be very difficult for gold to stay above $1,800”
In a note Monday, Sevens Report Research analysts said that He states that it has benefited from a combination of falling interest rates (nominal and real) week-on-week and the recent pullback from the relentless dollar rally. Analysts make the following predictions:
Looking ahead, gold remains in a countertrend pullback in an uptrend market. However, we will continue to monitor real interest rates and the dollar as the main effects. If these make new highs, it will be very difficult for gold to stay above $1,800.
