$ 70 is enough to change the fate of gold

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Gold prices have fallen sharply from record highs in an unexplained way. On the one hand, news streams about the war between Russia and Ukraine, and on the other hand, increasing economic risks and central bank policies have increased uncertainty in the precious metals market. The price forecast gap between top and bottom experts is widening, making it difficult for investors to take positions. When prices exceed $ 1,960 again, it is said that an important day to determine the direction of gold will begin.

Maintaining the Federal Reserve’s interest rate hike at 25 basis points at expected levels has boosted gold prices in the international market. Tested below the $ 1,900 / ounce level for some time after the Federal Reserve’s decision, Spot Gold then returned to the 1.935-1.950 band. Analysts say the gold price could retest the band at $ 1960 to $ 1980 / ounce, but continue to show support in the $ 1,900 to $ 1,890 / ounce range. Precious metal expert Florian Grummes points out the range of 1.960-2,030 in the price range to watch out to see if the downtrend is a spring fix and if the uptrend continues. Gold markets with a bearish look of less than $ 1,960 can face buying enthusiasm above $ 2,030, analysts say.

Price restraint alert

After the federal government’s decision, the market has focused on peace talks between Russia and Ukraine, increased risk to global economic growth, US Treasury yields, and dollar revisions. But experts say that in an environment where the Fed envisions much more stringent monetary policy, Ukraine’s protracted problems could reduce the search for safe shelters and significantly reduce the support behind gold. Is warned.

There is a clear organization in the record

■ Credit Suisse: $ 2,300 possible

The sharp return of gold does not undermine the expectations of financial institutions. Credit Suisse strategists are still waiting for the yellow metal to head to the $ 2,285 / 2,300 area. As long as it is above $ 1,863, banks claim that the weakening of gold is temporary and evaluate it as follows: As long as the average support of $ 1,863 for 55 days is maintained. In our view, resistance levels are $ 2,120 and $ 2,167. Eventually, we estimate that $ 2,285 / $ 2,300 will be tested. “

■ ABN AMro: Gold Price Outlook

In a report released by the bank this week, the following statement was used in gold: The war and sanctions between Russia and Ukraine cause a permanent restructuring of trade. I think the supply problem from Russia will continue for about a year. Consumer price inflation is expected to rise more broadly, putting pressure on consumption. We believe that growth will be weaker, inflation will be higher, and central banks will respond differently to these new challenges. As a result of this new outlook, real returns will be under pressure. In addition, the US dollar is expected to rise due to the risky environment and the demand for safe shelters in the market. Gold prices are supported in the current environment, but price volatility can be significant. New gold price forecasts for late 2022 and late 2023 are $ 2,000 per ounce. “

■ Fitch: War continues to be supported for now

Fitch Solutions Country Risk & Industry Research, a research institute, has revised its average gold price forecast for this year from $ 1,650 to $ 1,700 per ounce to $ 1,800 to $ 1,900 per ounce. The organization believes that gold will continue to rise amid concerns over the Ukrainian war and rising global inflation. Fitch Solutions expects gold prices to remain high compared to pre-COVID-19 levels. In the long run, he expects gold prices to continue on the path of easing as risk sensitivity returns and gold becomes less attractive. He predicts that prices will return to $ 1,600 by 2026.

Why did gold fall by $ 150?

  • Gold has fallen by nearly $ 150 after pushing up to a record high last week. There are several factors that can explain the decline in gold.
  • The Fed’s first rate hike since 2020.
  • The Fed is expected to continue tightening monetary policy.
  • Ceasefire negotiations between Russia and Ukraine reassure investors.
  • Crude oil prices continue to fall.
  • You can see that risk awareness is improving in the market. Stock market indexes are rising around the world.
  • The European Central Bank has announced that its assessment shows no risk of recession in the European region.