Gold made a good start to the week. With this attack, the yellow metal, which has risen above the spiritual resistance of $ 1,700, has shined again. However, he later gave back some of these interests. Analysts say that gold has pulled back its interests earlier in the week due to the recovery in Treasury yields and the dollar.
“If this happens, it is possible for gold to approach $1,900”
Investors got an update on the strength of the US labor market today. “Everyone will be watching closely the US September NFP and its impact at the November Federal Reserve meeting,” says Chintan Karnani, research director at Insignia Consultants. Karnani notes that for the market to see a slower rate of increase in interest rates, there must be an increase in unemployment in the USA.
Last week, the number of applicants for US unemployment benefits rose by 29,000, according to information released on Thursday. Thus, it rose to a five-week high of 219,000. As such, it’s likely a sign of increased layoffs as the US economy slows. In addition, Koindeks.com As you follow, the Federal Reserve is raising interest rates to rein in inflation. This contributes to the rise of the dollar and puts pressure on gold prices in dollar terms.
Karnani says bond yields, the direction of US stock futures and the US dollar index (DXY) will continue to influence bullion prices until the release of the US September consumer price index on October 12. US CPI figures will be released next week. The analyst notes that if it closes above the 50-day moving average after this information, gold will be “closer to $1,900”. Data from FactSet shows the 50-day moving average of December gold at $1,736.50.
“Gold may be ready for a relief rally”
Analysts at Sevens Report Research wrote that “recently established 2022 lows leave the path of least resistance lower for gold.” Gold futures on Sept. 26 fell to $1,633.40. This marks the lowest level since April 2020. Analysts make the following assessment:
However, with renewed hopes that we’ve reached the top of the falconry, gold could be poised for a relief rally from year-to-date lows. The key level to watch on the charts is the August high of $1,819. Because it is possible that a close at the top is a technically bullish development.
“Gold will continue its downward movement”
Gold price saw above $ 1,720 during the week. However, TD Securities strategists still say that gold will be in a downtrend. Strategists explain their views as follows:
A long period of restrictive interest rates suggests that traders should ignore gold’s siren invitations. Because always a downtrend will most likely prevail. Quantitative tightening will continue to raise real interest rates.
In the midst of this, Shanghai traders began to pull out of gold. In addition, strategists note that money managers hold the largest net short gold since 2018, driven by trend followers. From this point of view, strategists make the following comment:
We think a break below $1,740 will likely fuel CTA cuts. Also, this would suggest that the squeeze will progress further. Shanghai traders have left the market with fewer orders, moving away from precious metals.