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Investing.com – It rose significantly during Monday, after falling and then stabilizing in early trading, and after a strong decline in prices on Friday, affected by the surprising unemployment and producer prices data that was issued on Thursday.
As the aforementioned data transformed the scene in the markets, as the different assets reflected their trends moments after their release. As this data reinforced expectations of further tightening in .
Gold prices fell on Monday morning, affected by the dollar’s rise, and after US economic data recently raised fears that the Federal Reserve may raise more, but the trend has now reversed, with the dollar falling and gold rising.
Financial markets now expect the Federal Reserve to raise benchmark interest rates above 5 percent by May, with rates peaking at 5.3 percent in July, after recent data showed a lack of hiring in the labor market along with rising inflation and consumer prices.
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Gold and the dollar now
It recorded an increase during the current moments, to reach levels near $ 1846 an ounce, by 0.15%.
And futures contracts for the yellow metal also rose during these moments of today’s trading, at levels near $ 1855 an ounce, by 3%.
While it has declined in the current moments to the levels of 103.7 points, a decrease of 0.1%.
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Gold and the dollar a while ago
The price fell 0.2% to $1837.59 an ounce.
And the American fell 0.1% to 1847.60 dollars.
0.2% increase.
Here’s a look at technical indicators and moving averages over an hourly time frame:
Gold.. a narrow range
“Further downside for gold, however, should be limited as central banks appear willing to increase their bullion holdings,” said Ed Moya, an analyst at online trading platform OANDA. “Global recession risks are back, and that should lead to some safe-haven flows to gold,” he added.
But Moya also didn’t expect much progress right away, saying, “We may be stuck in a narrow range until we have clearer signals if inflation continues to accelerate here.”
The Labor Department reported on Thursday that US wholesale prices (producer price index), a major determinant of inflation, rose to a seven-month high in January.
According to the latest research by Daniel Ghaly, Chief Commodities Strategist at TD Securities, this environment could continue to affect the precious metals sector.
“So far, the bullish trend that has formed in precious metals prices is not compatible with a large number of soft jobs data that increased the risk that the Fed will not be able to cut interest rates in 2023. This scenario is likely to see Markets are back to the downside, as we estimate the trend is near $1,750 an ounce over the coming months.”
Federal remarks
Since the inflation update came out, Fed officials have been preparing for a prolonged period of higher interest rates, punctuated by expectations of a return to a 50 basis point rate hike in March, saying that higher inflation makes the central bank’s agreed 25 basis point amount this month in critical situation.
“We need to keep raising interest rates until we see more progress,” said Fed Governor Michelle Bowman. Inflation is still very high. As for what will happen to the economy next, your guess is not very different from mine.”
Richmond Fed President Thomas Barkin agreed, saying that controlling inflation requires more rate increases. “How much? We’ll see,” he added.
Bowman and Parkin’s comments followed more warnings about interest rates earlier in the week from other central bank officials.
Cleveland Fed President Loretta Mester said Thursday that interest rates in the United States must rise above 5% and stay there for a long time in order to significantly reduce inflation.
St. Louis Federal Reserve Chairman James Bullard, often seen as the central bank’s most hawkish, also said Thursday that he did not support reducing the amount of rate hikes — something that has happened in the past two months — until inflation was better under control.
Bullard added that he would support a 50 basis point hike in the Fed’s next interest rate decision on March 22, after a 25 basis point hike on February 2.
gold forecast
Highwood Securities published, in its outlook for 2023, that the economic recession in the United States of America is one scenario that cannot be avoided as long as the yield curve is inverted, with a gap that is the largest in 4 decades between the returns of the 10-year and two-year Treasury bonds.
In this atmosphere, analysts believe that this will lead to a significant rise and superiority over the stock markets.
“Despite the current volatility in the market, gold has been a source of relative stability recently and continues to provide investors with a safe haven in times of turmoil,” the analysts said in their report. “Thus, we believe that gold is less risky compared to other speculative areas in the market.”
The Canadian investment firm, which has more than C$15 billion in assets under management, said it expects gold prices in 2023 to average around $1,945 an ounce, up 2.4% from its previous estimate. At the same time, analysts said they see prices averaging $1,975 an ounce in 2024.
On the other hand, experts at Commerzbank said that it is likely that the US interest rate will rise near the level of 5.5%, and then expectations were lowered to 1800 dollars in the middle of the year, compared to previous expectations that it would settle near the level of 1850 dollars an ounce, but it is likely to happen A remarkable recovery in gold prices during the second half of this year, in light of the possibility of a recession in the US economy and its damage to high interest levels. Therefore, expectations were maintained at $1950 an ounce by the end of this year.
