6 Analyst: Prepare For These Levels For Gold Prices!

Dollar and US Treasury yields fell on expectations that the Fed would signal a slowdown in rate hike rates. As a result, gold prices rose on Wednesday. Analysts interpret the market and share their claims about what will happen next.

“A strong short-term rally is possible for gold prices”

Spot gold was trading at $1,668, up 0.92% at the time of writing. US gold futures rose 0.98% to $1674.2. Information released on Tuesday showed that US consumer confidence slumped in October. In addition, house prices fell sharply in August. This is a sign that the Fed’s aggressive stance is starting to cool the labor market. Yeap Jun Rong, IG market strategist, comments:

With gold prices in a bearish position, the possibility of a strong short-term rally is likely on the table if any indication of a rate slowdown from the Fed is presented.

“Dove becomes a pivot key for gold to regain its appeal”

In the midst of this, markets still widely expect the Fed to raise interest rates by 75 bps in November. However, it is also possible to discuss how much it can increase borrowing costs. In a note, OCBC currency strategist Christopher Wong highlights:

It’s possible that a calibration in the Fed’s tightening speed could slow gold’s bearish face. However, the dove becomes a pivot key for gold prices to regain their appeal. Gold is likely to attract “consolidative” trades in the near term. Technical reinforcement stands at $1,617. Also, it is expected to face resistance around $1,694.

“The effect of this will be upside for gold prices”

Investors are also watching Thursday’s US GDP and ECB meeting. They then focus on Friday’s US core inflation information. In the midst of this, expectations that the weakness in the US economy will slow the pace of the Fed’s rate hikes have increased. Because, Koindeks.com As you follow, the dollar fell and then gold reversed its course. Bob Haberkorn, senior market strategist at RJO Futures, comments:

We see a measure of weakness in the dollar and a measure of rise against the dollar in some other currencies. This pushes the bottom up again. If the Fed raises interest rates below the expected 75 bps, this will indicate a slowdown in interest rate hikes. As such, the effect will be upside down for gold prices. But gold investors expect something more tangible.

“Investors are still giving gold the cold shoulder”

Rising interest rates increase the opportunity cost of holding unyielding gold. This reduces the attractiveness of the nugget. In a note, Commerzbank analysts point to location information showing that the majority of speculative financial investors continue to bet on the falling gold price. However, it highlights the following:

Investors are still giving gold the cold shoulder. Therefore, it creates a permanent outlier.

Speculators switched to net shorts of 20,633 contracts under COMEX last week, the U.S. Commodity Futures Trading Board (CFTC) said on Friday. In the middle, the information showed that China’s net gold imports through Hong Kong in September fell by half compared to the previous month.

Precious technical levels for gold prices

Analysts say the appetite for gold will likely remain shaky as investors assess whether the Fed will stay hawkish next week. Lukman Otunuga, head of market analysis at FXTM, notes a quieter pace of increases after that. Talking about technical issues, FXTM’s Otunuga draws attention to the following levels:

Always gold weakness below $1,655 is possible to open the doors to $1,615 and $1,600 respectively. Furthermore, a break above $1,655 is expected to trigger a real rally to $1,670 and $1,680.

“Gold performed better in currencies other than the dollar”

For now, the pullback of DXY has provided a boost to dollar-denominated gold prices. Colin Cieszynski, chief market strategist at SIA Wealth Management, comments:

The fluctuations in the gold market are now driven by the ups and downs of its long-time enemy, the US dollar. However, investors should not forget that gold performs better than other currencies such as the euro, pound and yen. This shows that it continues to play its role as a costly storage tool. For example, this year, gold has managed to remain a treasure trove. On the other hand, the yen has collapsed to the point where multiple interventions from the BOJ are required to support it. In this direction, he achieved mixed success.

Will the Fed raise interest rates at a lower rate?

The decline in US Treasury bond yields also supported gold prices. Peter Grant, vice president and senior metals strategist at Zaner Metals and Tornado Precious Metals Solutions, says the market largely expects the Fed to announce another 75 bps rate hike at its meeting next week. The strategist explains:

This increase is an inevitable result. However, the tone of the policy statement will be a more worthy event.

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