US CPI data was released on Friday and came in above expectations. Although gold reacted with a decline at first, it later rose with a sharp move. However, yellow metal could not continue the week from where it left off. Gold fell from a five-week high of $1,879. However, TD Securities thinks the losses are not limited to this.
“High inflation will drive the gold price to $1,830-24 in the short term”
On a day when the crypto market turned into a bloodbath, the gold price also dropped. Spot gold prices fell 0.85% on a daily basis to $1,855 at the time of writing. Gold futures, on the other hand, were last trading at $1,857, down 0.98%.
TD Securities economists evaluated the latest developments in the markets. As a result, economists have announced that they expect the yellow metal to give up all these gains. In this context, they state that while policy rates rise sharply, gold tends to fall below $1,800. Economists predict the following levels for the gold price in the short term:
High inflation is likely to pull gold prices to the trading range of $1,830-24 in the short term. In the long term, the yellow metal should materially drop below $1,800.
TD Securities: Our predicted fix is not a smash
As you can follow from Cryptokoin.com news, USA Inflation data came in quite warm. Expectations were that the CPI would be 8.3%. However, the figures showed 8.6%. This proved that the Federal Reserve will act more decisively in the interest rate hike process. At the same time, analysts see the possibility that the Fed will take steps towards further hawking.
TD Securities economists also consider energy and other price pressures in the economy. Given these data, economists are betting that gold is down on the horizon. They explain the reason for this as follows:
It is quite possible that the Fed will withdraw the increases by sacrificing price stability in return for full employment. However, it is too early to say that they will soon introduce policy uncertainty. Therefore, our anticipated fix is not a rout. That’s why we think we’re going to face a rebound in gold next year.
However, the Federal Reserve’s move at this week’s meeting will be the focus of the markets. According to analysts, it is highly likely that the Fed will increase by 50 basis points. However, it’s not clear whether a 75bp bunny will come out of the hat. In addition, it is very important how he will act not only in this meeting, but also in other meetings in other months. Therefore, after the decision, eyes will be turned to the speech of Fed Chairman Jerome Powell.
