The gold price eased on Wednesday as the US dollar rose. However, due to the lack of any new triggers, prices moved in a narrow range in stagnant trading. Analysts interpret the market and share their forecasts.
“These will be the main factors affecting the gold price”
Spot gold was trading at $1,804.50, down 0.5% at press time. U.S. gold futures fell 0.55% to $1,813.10. Hareesh V., head of commodities research at Geojit Financial Services, says gold is seeing limited price action as trading activity is light ahead of the New Year holiday and there is no major economic data scheduled this week.
Meanwhile, the dollar index (DXY) rose 0.1%. Thus, it made dollar-priced gold more expensive for offshore buyers. Also, 10-year benchmark bond yields fell from a one-month high in the previous session. Hareesh ve comments:
The performance of the dollar, inflation data, the Fed’s rate hike path, developments in China and geopolitical tension will be the main factors affecting gold prices in 2023. Meanwhile, easing restrictions in China due to expectations of increased demand will have a positive impact on industrial metals.
“Gold price follows China’s decisions to relax Covid restrictions”
The Fed cut its rate hike to 50 basis points (bps) in December, after four consecutive increases of 75 basis points each. But Fed Chairman Jerome Powell has warned that the central bank will raise interest rates further next year. cryptocoin.com As you follow, the expectations that the Fed will slow the rate of increase in interest rates weakened the attractiveness of the dollar. That’s why gold rose nearly $200 at the end of September from the low it had seen for over two years.
China, the largest consumer of gold, has loosened quarantine rules in a major step towards easing borders at its borders, which have been largely closed since 2020. Bob Haberkorn, senior market strategist at RJO Futures, comments:
Gold follows China’s decisions to further relax Covid restrictions, despite rising returns and anticipation of higher demand from the region.
“Gold price is in an uptrend”
Kitco Metals senior analyst Jim Wyckoff says gold futures bulls generally have a short-term technical advantage. The analyst points out the following technical levels for the gold price:
Prices are in a seven-week uptrend on the daily bar chart. The bulls’ next upside price target is to close the February futures contracts above the solid resistance at $1,900.00. Initial resistance stands at $1,825.00 followed by last week’s high at $1,833.80.
“Sustainable recovery is possible if the Fed returns”
Exinity chief market analyst Han Tan says that gold performs in line with risky assets. In this context, the analyst makes the following statement:
Other signs that the king dollar is loosening its hold on the safe-haven throne are encouraging gold bulls to push spot prices back above the psychological $1,800.
OCBC FX strategist Christopher Wong comments on the impact of recent market developments on gold:
Gold was weak for most of 2022 amid aggressive monetary tightening, rising real yields and a stronger dollar. The trend reversed as the Fed went into policy adjustment mode. Therefore, sustainable recovery in gold prices is possible if the Fed returns.
“This will be a positive catalyst behind gold”
Analysts at Sevens Report say the following for their 2023 forecast:
Gold continues to stay just below multi-month highs. Also, if the opposing view of the dollar weakening in 2023 bears fruit (and there is reason to believe it will), gold will be a positive catalyst behind it as we start the new year.