Analysts: Expect These Levels For The Price Of Gold Next Week!

Gold rallied strongly on Friday as markets raised bets on a slower tightening cycle following the Fed’s November meeting. Analysts are now taking a closer look at next week’s U.S. Q3 GDP and benefits reports to get a better look at the state of the U.S. economy.

“This really excited the investors” As you follow, December gold futures rose more than $20 on Friday. After seeing the lowest level in two years, it traded at $1,657.80. Thus, it nearly broke the key reinforcement level at $1,620 earlier in the week.

The Wall Street Journal reported that the Fed will discuss the extent of future rate hikes following the widely expected 75 basis point increase in November. Subsequently, the market’s reconsideration of interest rate hike expectations triggered the rise. Edward Moya, senior market analyst at OANDA, comments:

The idea that we could see the Fed debating whether to switch to a slower tightening pace has really excited investors. Prior to Friday’s news, markets had expected an increase of 75 bps in November and 75 bps in December. Now, if the Fed argues, it’s easy to justify a half-point change in December. Plus, it’s likely that the US economy is starting to see the impact of the first rate hikes.

“Next week is critical for gold price”

Edward Moya finds Friday’s rally impressive. According to the analyst, gold remained at $1,620 after a valuable pivot on rate hike expectations. Moya continues, commenting:

Gold may have missed the bullet here. The next week is critical for the interest period. There is a lot of market potential for volatility. I’m leaning towards the uptrend for the next week. We’ll likely see support for the Fed’s downshift idea.

Edward Moya is keeping a close eye on next week’s third-quarter GDP data scheduled for Thursday. Market consensus claims are headed for growth to pick up to 2.1% after two negative quarters. The analyst makes the following statement:

GDP data is a big wildcard. After a run of two terrible quarters, we need to get back to the positive. There’s a lot going on here that can complicate things. The current risk is that something will break for economics.

“Technically speaking, the gold price is still in a downtrend”

According to Walsh Trading co-manager Sean Lusk, technically, we should just stay here. Otherwise, the analyst predicts that prices will drop another 5% to $1,560, and then to $1,470-80. According to Lusk, this is technically shaping up. However, from a bargaining standpoint, he notes that gold has experienced a six-month decline after peaking above $2,000 in March. Therefore, “What will happen when it’s over? How much is enough before you see the stabilization?” he asks. The analyst continues his explanations on the following side:

There is a risk that gold will drop another $100 before it finds its bottom. The $1,620 level should stay in the near term. The graphs have potential double bottoms. Investors sell to rallies. In the short term, we hit the bottom. That’s why I’m going up next week. But all bets are on the Fed meeting in November.

“We will see gold react slowly”

Everett Millman, precious metals specialist at Gainesville Coins, says gold is currently in uncharted territory. He points out that gold has been well below some precious trade levels since the beginning of this year. Millman explains his views on the matter as follows:

It will be interesting to watch how quickly these high interest rates reduce inflation. Higher interest rates have a negative effect on the gold price. However, high interest rates of 5% are still below the inflation level. So real interest rates are still negative. If the Fed returns next year, we will see gold react slowly.

Another unknown to watch is China. Because, it has decided to postpone the publication of the macroeconomic indicators, which are planned to be published this week, including the third quarter GDP data. Millman says the following about this issue:

China is becoming less transparent and delaying reporting on economic data. I’m tracking how long this delay will last. If we go a month or longer without data from China, a major red flag is possible driving additional safe port flows.

Next week’s macro data

  • Tuesday: CB consumer confidence, Janet Yellen speech
  • Wednesday: US new home sales, Bank of Canada interest rate decision
  • Thursday: European Central Bank rate decision, US jobless claims, US Q3 GDP, strong goods orders
  • Friday: US PCE price index, US pending home sales

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