The price of gold has failed to hold above $1,900 an ounce this week as markets reacted very ambivalently to the Fed’s half-point increase on Wednesday and announced at its June meeting that there would be no 75 basis points increase. The precious metal closed the week down 1.6 percent with June Comex gold futures trading at $1,883.30 an ounce. As Kriptokoin.com, we convey the factors affecting gold prices and expert opinions.
Recession concerns continue
The Fed made one of the most anticipated announcements this week. Markets reacted to the Fed’s announcement as the Nasdaq reversed all its immediate gains and fell 5 percent in its worst one-day sell since June 2020. OANDA senior market analyst Edward Moya said in an interview:
A recession has become inevitable in the US. Now that Wall Street believes the Fed is on track to raise rates by half a percentage point in the next few meetings, they will have to decide whether to continue or change course. Many investors and analysts felt that the Fed should keep all options on the table in order to fight inflation aggressively. But the Fed is signaling that it believes inflation has peaked. There is probably fear that the Fed has made a mistake and may have to plunge the economy into a recession much sooner. locked it. In response, the bond market continued to sell out, pushing the US dollar index closer to 20-year highs, which is bad news for gold.
Gainesville Coins precious metals expert Everett Millman said in a statement:
My reading is that the Fed is facing a credibility issue with market participants. There are concerns that the Fed could cause a recession as interest rates rise. It is important to consider the inverse relationship between interest rates and unemployment. Unemployment is very low right now. If markets perceive the Fed to be willing to allow unemployment to rise in order to curb inflation, it could result in prolonged, unfavorable conditions for risk assets… A large amount of risk assets were liquidated in post-Fed trading, with many investors cashing in. That’s why all the markets collapsed together. Considering how high the US dollar is, it’s important to remember that gold holds up pretty well. The pullback provides plenty of room to invest in gold. Also, the US dollar index could be near its top. This is good for gold as it creates a favorable macroeconomic environment for the precious metal. However, intraday volatility in prices is likely to increase.
Here are the expected levels for the price of gold
OANDA senior market analyst Edward Moya likened gold to a punching bag in terms of fighting power and said the precious metal will continue to struggle until the US dollar falls. . Moya also stated that the key resistance for the coming week will be $1,900-1,920 per ounce and the $1,850 level will be the first support target, and if this level is broken, it could send prices to $1,800. The analyst also added that the longer the supply chain problems continue and the war in Ukraine continues, the more it will slow growth, explaining:
If we continue to see risk aversion in stocks and the dollar appreciates as much as we are used to seeing it. if not strong, gold may start to stabilize. There is still a huge risk that we may experience another big move in bonds… and gold may still be vulnerable to the last big sell-off before bottoming out… Markets will depend on extra data next week, and the critical data to watch will be US inflation numbers for April.
ING international chief economist James Knightley also made statements about the gold price. James Knightley said:
Consumer price inflation will be the key figure in the US next week, hopefully showing that inflation has passed its peak with a year-over-year slowdown, and core inflation is coming down. Lower gasoline prices, as well as the drop in used car prices, predicted by data from Mannheim auto auctions, will also be of great help. However, it will be a long and slow decline to reach the 2 percent target.
