If gold fails to close around $1,820, a summer rally for the precious metal is out of the question, according to analysts. Some analysts even warn of a pullback to $1,700.
Gold couldn’t get enough of low US CPI
Gold closed Friday’s price action up 1.5% for the fourth week in a row. December Comex gold futures were last traded at $1,818.10. Many analysts expected gold to see a significant rally after the slowdown in inflation.
cryptocoin.com As you can follow, CPI figures came in below expectations this week. After the 9.1% data in June, annual inflation reached 8.5%. But gold didn’t take advantage of the sudden gains that precious metals had seen. Bart Melek, head of global commodity strategy at TD Securities, said in a statement:
CPI data was lower than many expected. This was primarily due to the drop in energy.
“There is still a risk of gold prices pulling back to $1,700”
Bart Melek agrees with Fed speakers this week opposing the Fed’s return from aggressive rate hikes. “It remains a major issue surrounding inflation. “There is a possibility that inflation will continue to remain beyond the Fed’s choice,” he says. The problem is that energy prices are likely to continue falling in the short term. But inflationary pressures are likely to return as colder weather begins. The analyst makes the following assessment:
After August, energy will cease to be a source of disinflationary pressure. As winter comes, demand increases. It is possible that these price decreases we see in energy will decrease. The Fed is unlikely to be as comfortable leaning towards lower interest rates as many expected in early 2023.
Bart Melek warns that the risk of a retracement of gold prices to $ 1,700 is still on the table. “According to Fed commentators, the central bank is of the view that inflation is a problem and that a slower economy will not stop them from taking action,” the analyst explains.
Phillip Streible: Gold failed to break!
Also, Blue Line Futures chief market strategist Phillip Streible said it’s a risky rally construction in stocks that is pulling money in gold. “The move in US stocks has led to FOMO repurchases, including meme stocks,” Streible says. According to the analyst, those who made money in precious metals in the last rally may want to shift those gains to other asset classes with significant gains, such as momentum stocks.
Streible points out that he is cautious as he enters the next week after gold failed to exceed $1,850. In this context, the analyst makes the following comment:
Earlier in the week, we saw the dollar fall and yields pull back. However, gold failed to break through. The price of the precious metal should be a fair value of $1,850. The fact that we can’t go up and gain momentum makes me a little cautious.
Important technical levels for yellow metal
Streible adds that gold needs to close $1,825 to rekindle the new bullish momentum. “Otherwise, the chart looks a little technically tired here,” the analyst says.
Bart Melek says initial support for the yellow metal is around $1,783 at the 50-day moving average. It also notes that the resistance is at $1,830. He states that if it does not hold $1,783 later, $1,772 will come into play.
Next week’s data
The focus for next week will be the minutes of the FOMC July meeting. In addition, US retail sales and housing data are among the important data to watch.
- Monday:NY Empire State manufacturing index
- Tuesday:Building permits and housing starts, Industrial production
- Wednesday:Retail sales, FOMC meeting minutes
- Thursday:Unemployment claims, Philadelphia Fed manufacturing index, Existing home sales
