© Reuters.
Investing.com – Over the past few days, the chaotic market environment has begun to draw investors in, along with growing concerns about the contagion of the Silicon Valley collapse of SVB.
Meanwhile, markets also re-evaluated expectations for a hike ahead of the meeting after Friday’s employment data and inflation data released a while back. As the coming days are in between the movements of the precious metal and will affect it for the coming months.
To understand the nature of these events and how they affect gold and the dollar, while monitoring the most important expectations, you can follow the free webinar presented by the technical analyst, Mr. Ghaith Abu Al-Hilal, through “Investing Saudi Arabia”, which is scheduled to be held today. Via this link:
Read also
What is driving gold’s movements in the coming period?
There are two main factors that could push gold higher, the risk of contagion and the question of whether or not the Federal Reserve can continue to tighten, both of which are good for the precious metal.
It rose to its highest level in five weeks after the US banking sector crisis, as gold rebounds in times of crisis, and jumped to the highest level of $1,900 an ounce.
In the meantime, if gold closes weekly above this level, it will lead to a resumption of the broader bullish trend, and we may see levels above $2000 an ounce soon.
The market is currently undergoing a heated debate whether the Fed chooses to hike by another 25 basis points on March 22nd or halt the tightening cycle and lock rates at current levels at the next meeting. As the Fed’s decision will be heavily determined by the consumer price data, which just came in line with experts’ expectations.
Banking crisis.. negative for gold?
Although the banking crisis pushed gold higher, the banking repercussions are optimistic for gold in the short term but could be a negative driver in the long term. As all this money being printed to help weather the crisis makes it less valuable. That is why the dollar is being sold today.
As a result, gold is only consolidating as a safe haven. But once we get past this crisis, more of this money will lead to more inflation. The Fed will then have to continue raising interest rates. Which will negatively affect gold prices.
Despite the huge rise witnessed by the precious metal during the past hours, economists at ANZ Bank expect gold prices to fall near the level of $1800 an ounce within three months, but experts believe that it may rise towards the level of $2000 an ounce by the end of this year.
Safe Haven.. The scene is still complicated
Despite the challenges that stand in front of the rise in gold prices, such as the plans of most central banks to continue the pace of monetary tightening and raising interest, which causes a decline in demand for non-return assets such as gold, we must also not overlook that there are many factors that help recovery The precious metal, which is that gold rebounds in times of crisis, as happened in the banking crisis, however, the data package that was released recently does not suggest that the Fed may prove the interest rate or raise it by 25 points at the next meeting.
To understand how the precious metal interacts with crises, after the occurrence of the global financial crisis in 2008, investors did not find a safe haven other than gold with the collapse of financial markets, as it rose 25 percent between 2008 and 2010, and as soon as the stability of global markets returned somewhat since the end of 2011, the demand for gold returned to decline After falling to levels close to $1,000 an ounce in 2015, gold has returned to rise strongly since then, and as soon as the Covid-19 epidemic broke out, demand for gold increased again to record levels at $2,074 an ounce, then the war between Russia and Ukraine came to confirm the attractiveness of the yellow metal. As a safe haven, to return to $2,000 an ounce again, before central banks start the pace of monetary tightening.
We conclude from this that the scene is still somewhat complicated, especially with the conflicting interest expectations, and the ambiguity of the scene so far with the banking crisis, as no one knows when it will end, how deep the crisis will be, and whether this infection will spread to other banks later or not.
In order to decipher the mysteries of the market and try to decipher these complexities that have exacerbated during the past few days, we recommend that you register for this free webinar, which aims to answer all these questions and remove the ambiguity about the movements of gold and the dollar in the coming period.
The symposium will take place today, shortly from now, and all you have to do is register to attend for free from here:
