The gold market remains in the conflict between rising interest rates and inflation. However, prices finished the week above the range of over $ 1,850. For this reason, according to analysts, it is possible to shift the momentum to the rise.
“Gold does exactly what should be”
Kriptokoin.comAs you have followed from the news, gold prices have been around $ 1,850 for the last three weeks. After the intense sales pressure at the beginning of Friday, prices bounced from support. Then the price, $ 1,825 just above the dollar, a precious metal dramatic recovery experienced.
August gold futures were last traded for $ 1,876.50. This shows that it ends the week with a 1.5 %gain. Economic data that caused disappointment, including hot inflation than expected last week came. According to some market analysts, these data provided a new rise acceleration for precious metal.
At the same time, the more weakness in the stock markets increases the safe port charm of gold. RJO Futures Senior Market Analyst Bob Haberkorn is making the following assessment:
Gold does exactly what should be. Investors once again look under the protection of inflation risk and the presence of a safe port.
Bob Haberkorn: In this environment, you really want gold
On Friday, the US Department of Labor announced that the Consumer Price Index increased by 8.6 %annually in May. After that, the general market feeling returned to negative. Consumer prices reached the highest level of 40 years due to increasing food and energy prices.
After Friday morning, Michigan University, the consumer confidence index has fallen to 50.2, the lowest level of 50 years. At the same time, consumers expect to increase inflation by 5.4 %in the next 12 months. Bob Haberkorn interprets the sales and gold rally in stocks as follows:
The market realized that the Federal Reserve had nothing to restrain inflation. The Fed will continue to increase interest rates. However, this will not be high enough to meet inflation anywhere. In this environment, it is really the gold you want.
Ole Hansen, President of SAXO Bank Commodity Strategy, said increasing consumer prices increased the risk of the FED’s policy error. However, the Fed is not alone. The strategist states that it also applies to central banks around the world.
“I don’t want to mix under this time”
Momentum is currently supporting gold bulls. On the other hand, the markets expect the Fed to increase interest rates by 50 basis points next week. For this, the gold market is still faced with challenging winds. Ole Hansen is trying to understand how much market interest rates will rise. In this context, he says he’s neutral about gold next week. Hansen makes the following statement:
Currently, investors do not know which direction the market will go. I don’t want to mix under $ 1,875 until I see a constant movement.
Bart Melek: Rising interest rates, still negative for gold
Bart Melek, President of the TD Securities Commodity Strategy, says gold prices may fall below $ 1,850 next week. The reason for this is the Fed’s monetary policy meeting. He adds that the short -term interest rates are still negative for gold.
However, Bart Melek has doubts about how determined the Fed will be to tame inflation. Therefore, the question of whether the Fed will take the risk of pushing the economy to recession continues. Melek is waiting for the FED ‘interest rates’ will increase’. However, in the long run, he continues to rise in gold. Bart Melek says:
The FED is not ready to do whatever it takes to control inflation.
Watch consumption data next week
Markets closely follow inflation. Analysts and economists focused on US retail sales next week. In this respect, investors should pay attention to consumption figures.
The negative impact of inflation on the consumer is likely to continue. In this case, Ole Hansen says that weaker consumption will lead to lower economic growth. Economists, on the other hand, say that a strong labor market and increasing savings help to support consumers so far this year. However, savings decreased due to decreasing purchasing power.
There is pressure on real revenues due to higher prices. Considering the surpluses in this field of the economy, this will predominate especially on future goods expenditures. Economists in CIBC, high interest rates, the second half of the year, the total consumption increase in a way to slow down, he says. They say that the demand for large tickets and the limitation of housing expenditures will be an factor in this.
