According to analysts, recent movements in gold prices are important for year-end forecasts. Gold provides promising signs amid rising geopolitical tensions and intensifying market volatility. Meanwhile, all eyes are on the latest employment and inflation data. Here are the market events and forecasts…
How has this week been in the gold markets?
cryptocoin.com As we have also reported, prices rose from the lowest level in 2.5 years. It then headed towards $1,700 an ounce. Thus, the gold made a significant improvement in the middle of the week. December Comex futures were up more than 1 percent on the week at $1,673.70. Frank Cholly, senior market strategist at RJO Futures, said the short-term sideways trend is fading. Cholly used the following statements:
Gold made a significant comeback on Wednesday. We made a fresh turn from the lows and finished with a higher close. We had some tracking levels on Thursday and Friday. Looking at the gold chart, this is very positive.
Cholly states that if the gold market rises above $1,700 again, the uptrend will be maintained. He added that in this case, a run towards $1,740 would be possible. Prior to this week, gold techniques were very negative, especially after falling below $1,680. DailyFX strategist Michael Boutros said a sharper drop below $1,600 could open the door for a more substantial sell-off to $1,290. Boutros used the following statements:
Techniques were very bleak here. If gold prices can climb above $1,706, we can eliminate this downside break. But the higher move should happen in the next two weeks. Otherwise, the downtrend will take over. It is very important what the price will be in the next two weeks. The extraordinary speed and magnitude of the Fed’s rate hikes are putting heavy pressure on gold.
TD Securities analyst: Geopolitical gains are temporary
According to experts, geopolitical tensions could be a short-term driver to push gold above $1,700. Most recently, Russia annexed four regions in southeast Ukraine. He also promised to use all necessary means to defend the area. Boutros added that “if the escalation in Russia starts to raise concerns about the nuclear threat,” it would be positive for gold.
However, Bart Melek, head of global commodity strategy at TD Securities, disagrees. Melek said that it should not be forgotten that any geopolitical gain below is temporary. “Every time there is an increase in geopolitical risk, there is at least a temporary rise,” he said. But given the monetary policy situation, it will be difficult to change the overall bearish trend of gold. Angel used the following statements:
Ultimately, the US dollar remains strong. My appearance has not changed. The Fed will continue to raise interest rates. We’re going to get the Bank of England to tighten quite aggressively as well.
What does technical analysis show in gold price?
According to technical analyst Christopher Lewis, if the US dollar starts to rise again, gold will go straight down. According to the analyst, the $ 1,680 level is of course very important, but more importantly, it will be the $ 1600 level. Because if we go below that, we will witness that the market regresses even more. According to the analyst, the market falling below this area opens the doors to $ 1,500 and then $ 1,250. “I am not interested in buying until it is well above the $1750 level,” the analyst says. Even then, he says, central banks should see a change in stance.
How will employment and inflation data affect gold?
The near-term direction of gold will largely depend on employment and inflation data released in the first two weeks of October. Melek said she does not foresee a break in the gold until she sees the employment and inflation figures. He thinks that if the CPI or employment data comes in stronger than expected, gold will react negatively. Market consensus calls forecast the unemployment rate to remain at 3.7 percent, a 50-year low. Annual inflation figure is expected to reach 8.1 percent in September after 8.3 percent in August.
Next week’s data
- Monday: US ISM manufacturing PMI data
- Wednesday: US ADP non-farm payrolls and ISM non-manufacturing data
- Thursday: US jobless claims
- Friday: US nonfarm payrolls
