Jakarta, CNBC Indonesia – World gold prices are still volatile on Tuesday (27/7/2021), and have been happening since last week. Volatile means, gold moves up or down quite significantly, then reverses direction in a short time.
This movement shows that market participants are still unsure where gold will go, given that there is a very decisive factor this week, the announcement of the monetary policy of the United States (US) central bank, also known as the Federal Reserve (The Fed).
Launching Refinitiv data, the world gold price until this afternoon moved up and down in the range of US$ 1,792/troy ounce to US$ 1,801/troy ounce.
In recent days, the range has been wider, but in late trading it has always weakened or strengthened slightly and was not far from US$1,800/troy ounce.
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This has caused Antam’s domestic gold price to move slightly but on a downward trend.
The direction of the new gold movement will be clearer after the Fed announced monetary policy on Thursday morning Indonesian time. So you should be wary if you want to invest in gold before the announcement.
Analysts from Commerzbank said gold investors were reducing their exposure to the precious metal ahead of the Fed’s monetary policy announcement.
This statement is reinforced by data from the Commodity Futures Trading Commission (CFTC) showing a decrease in buying contracts (long) and sell (short) in the week ending July 13. This means that market participants are temporarily out of the gold market. Understandably, the Fed’s policy can change the direction of gold movement in a short time.
Data from the CFTC shows the position long decreased by 775 contracts to 135,163 contracts, while the position short the decline was much bigger, 4,912 contracts to 44,735 contracts. So the current position is still net long more than 90 thousand contracts.
“The gold market is pausing to see what happens next, but I think with global economic growth at risk of slowing, gold will benefit,” said Rob Haworth, analyst at US Bank Wealth Management. 2021).
This statement can explain the dominant long position of the CFTC report.
However, expectations of gold will accelerate again due to slowing global economic growth could be dispersed if the Fed indicates tapering or a reduction in the value of the asset purchase program (quantitative easing/QE) will be done in the near future. Not only dispersed, but the price of gold is at risk of falling.
Analysts from the Commonwealth Bank of Australia (CBA) predict that the Fed will provide a timing signal tapering is near, and will make the US dollar mighty.
“We expect the monetary policy-making committee (FOMC) to omit the word ‘substantial’ from ‘further substantial progress’ in its policy guidance,” CBA analyst Joseph Capurso wrote in a note to clients. 2021).
“Eliminating the word ‘substantial’ would be a signal that the FOMC believes it will be reducing the value of QE in the near future, and the announcement tapering will officially be carried out in September,” he added.
Whatever predictions analysts make regarding the Fed, it will be answered on Thursday morning Indonesian time, and gold will respond.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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