For now, the gold market continues its solid gains from last month. According to analysts, the yellow metal could be on the verge of a new bull market as we start the new year.
“Gold, ready to explode”
The yellow metal aims to end the last trading day of 2022 about $5 below its opening price at the beginning of the year. February gold futures were last traded at $1,825.70. cryptocoin.com It has been a turbulent year for the precious metals market. The Federal Reserve’s aggressive monetary policy stance weighed on investment demand. In early November, gold prices dropped to a two-year low at $1,618.
However, since these lows, gold prices have increased by about 13%. It is possible that this is the start of another movement. “Gold is poised to explode,” says Ole Hansen, head of commodity strategy at Saxo Bank.
Cordovatrading founder Julia Cordova says that if gold holds the $1,820 support, it will likely trigger a move towards $1,860. Cordova commented on Twitter on Thursday:
Gold threatens to explode once again. Also, if he manages to hold it this time, a big move is coming.
Yellow metal closes the year in neutral territory
Gold struggled to attract the attention of investors until 2022. However, it was still one of the top performing assets this year. Yellow metal ends the year in neutral territory. However, the S&P 500 is expecting a 20% loss and the last trade is at 3,803 points. At the same time, silver is closing the year strongly, outperforming gold. March silver futures are poised to close the year around $24, up more than 2% year-to-date.
Last month, gold and silver benefited from shifting interest rate expectations. Economists predict that the Federal Reserve will continue to raise interest rates. However, many see a peak in the first half of the year. At the same time, there is a serious recession fear in the market. This raises forecasts that the Fed will begin lowering interest rates in late 2023 or early 2024.
Markets to follow US labor data
According to some economists, it is possible that the labor market report coming next week will determine the course of the markets for at least the first quarter of the year. Fed Chairman Jerome Powell warned investors at a news conference on Dec. 14 that the labor market is too tight to change the central bank’s aggressive monetary policy stance.
Economists have recently been taking a close look at the Department of Labor’s monthly Job Openings and Workforce Turnover Survey, or JOLTS report. Economists point out that further declines in the number of available jobs will signal higher unemployment over the next few months. Economists at TD Securities say the December nonfarm payrolls report expects continued resistance in the US labor market. In this context, Economists underline the following points in a note released on Friday:
Job creation likely picked up in December, with payrolls strengthening at the close of the year, the latest indicator of tight labor market conditions in the US. Unemployment rate has also probably dropped to 3.6%. However, we expect wage growth to remain high at 0.4% monthly after accelerating to 0.6% in November.
“Gold is up, but struggling to gain momentum”
Market analysts continue to argue that the Fed will start lowering interest rates again next year. Meanwhile, gold rallied this week as the weakening US dollar supported precious metal prices. Oanda’s senior market analyst Craig Erlam says in a note that gold has risen but is struggling to gain momentum. Based on this, the analyst makes the following comment:
The outlook for the yellow metal may still look very positive as central banks are definitely approaching peak interest rates and the economic outlook is rather bleak. But in the near term, a correction is possible in the absence of another bullish catalyst.