The highest inflation symptoms and slower growth revives the sensation in the market. And this comes with hopes that the Fed may not need to tighten as much as possible. However, for gold, this means a more horizontal trade because it approaches a significant level of $ 1,800.
“Possible to have a complication for gold”
Investors see signs of stagnation in daily macro data. Therefore, the narrative shifts the narrative to more slow growth concerns than the fears of inflation. And this changes the expectations of excessive hawk from the Federal Reserve.
Central banks are making aggressive interest rate hikes, which have started to call for a much weaker consumer and more recession. There is no definite agreement. How hard will this recession be? What is the general view for the FED policy? There are too many variables. Oanda Senior Market Analyst Edward Moya says:
Markets excessively react to any shift in inflationist expectations. If we see more signs of the highest inflation, this will provide a wide relief for risky assets. It is likely to have a complication for gold. If gold is going to be a safer harbor, will it be valued when we see a risk -based return?
Edward Moya: That’s good for this gold
In addition, Edward Moya adds that demand destruction will indicate a potential summit in inflation in the US, which is closely monitored by investors. Moya evaluates the issue as follows:
We really need to see how weak the US consumer is. This will determine what to force the Fed to change the speed of tightening. We are likely to see a wavy dollar trade. Underneath it is likely to support consolidation. If we start to see that the demand for the treasury bonds has increased, it is possible to pull down the treasury returns at the long end of the curve. That’s good for gold.
“This is what gold should do in terms of protecting wealth”
If inflation peaks, investors will turn their attention to how the economy performance. Gainesville Coins Dear Metals Expert Everett Millman makes the following comment:
A potential recession for gold means at least a stable trade model. He wants to be gold consolidated and make a horizontal trade. This is what gold should do in terms of protecting wealth.
“The demand from regular investments will increase and gold will rise!”
The next three -month GDP report is the macro indicator to be followed as it appears. This is important because it follows the first quarter, which is a 1.5 %contraction in US growth. Everett Millman says:
This will confirm or reject whether we are in a stagnation due to the technical definition. Two quarters of negative growth will attract attention. It is positive for gold. When liquidating the positions of hedge funds or large institutions, it is possible to fall as the first reaction. However, the demand from regular investments will increase and gold will rise.
“Gold will not fall below the lowest level of this year!”
Edward Moya says most people expect the Fed to increase 75 basis points in July. He also states that some expect to start pricing only 50 basis points after that. In this context, he makes the following assessment:
A slower tempo is already considered for tightening. This is good news for gold. Gold will perform like a safer port than more people expected this summer. Gold will not fall below the lowest level of this year.
“It is possible that this environment will create a tremendous demand for safe ports”
Unstable growth views are also something to be followed. While the US is likely to see a slight stagnation, growth abroad is still a big question mark. Edward Moya notes that this environment should encourage new demand for safe ports such as gold. Analysts say that gold closed the week with a decrease of 0.7 %, but the real test will come if it reaches $ 1,800 next week. Edward Moya makes the following statement technically:
It is below some important technical levels. I want to wait for $ 1,800. It will be important to see if the situation is like this. Gold is getting stronger. Most of this was about the US dollar run, which caused trouble for gold.
What do you need to break the gold from the transaction range?
Kriptokoin.comAs you have followed from the Yellow Metal so far $ 1,800 has been a vital support level. Everett Millman says that if gold falls below it, a large sale can be realized. Meanwhile, the upper limit of the $ 1,850 level is a stubborn level of resistance. Millman draws attention to the following levels:
In order to break the gold from the procedure range upward, it must first exceed $ 1,850 and then $ 1,870. In a correct recession, it is possible to break the gold partially $ 1,900. Because when it comes to comex, if we see a sudden increase in demand, there will be enough gold to meet the demand in the gold -term trading market. In this case, prices will increase quite quickly.