The US Federal Reserve (Fed) continues its monetary tightening trend; However, the hawkish stance does not worry the gold market as much as before and ounce gold maintains its high levels below $ 2,000.
Although the Fed left interest rates at 5.5 percent after its monetary policy meeting on Wednesday, Chairman Jerome Powell left the door open to new interest rate increases.
Powell’s confirmation of the Fed’s tightening trend caused gold prices to briefly fall to a five-day low; However, the precious metal quickly recovered and climbed back above the 200-day moving average to $1,986.
WALL STREET DOES NOT BELIEVE IN NEW INTEREST RATE INCREASES
Edward Moya, senior market analyst at OANDA, says the Fed maintains its hawkish stance, but is not hawkish enough to scare the markets. The expert said, “The Fed did not rule out the possibility of an interest rate hike in the coming months, but swap agreements showed that investors were not convinced. “The Fed has tried to maintain a hawkish stance, but Wall Street does not believe there will be additional tightening this cycle,” he says.
UPCOMING US ELECTIONS WILL ALSO CREATE RISKS
State Street’s George Milling-Stanley also argues that geopolitical uncertainty and the Fed’s ‘higher for longer’ approach will support higher gold prices. The upcoming US elections are another risk, according to the analyst, who thinks that higher interest rates for a longer period will continue to put pressure on stock markets and make gold attractive. The expert says: “Presidential elections are next year in the United States and things are liable to get ugly. This will increase the level of geopolitical tension in the world. There’s a lot of anxiety everywhere you look, and I don’t see that going away anytime soon. “This is positive for gold.”
Andrew Hunter, an analyst at Capital Economics, calls Powell’s latest comments a bit dovish. According to the expert, the Fed left interest rates unchanged, showing that it remains in ‘wait and see’ mode.
THE CLAIM “IT’S ON ITS WAY TO $2100”
Finance company AG Thorson says that an important stage has been reached in gold. In the company’s analysis, “When you step back and look at the gold chart, we see a strong upward trend. The downward trend is completing, we expect an upward break in the coming months. There could be a rally above $2,100. “This could trigger a strong rise in 2024.”
Commerzbank also set its estimate for the gold price at the end of 2024 as 2,100 dollars/ounce.
TD Securities Head of Commodity Strategy Bart Melek makes a similar comment. Melek said, “Continuous and solid gold purchases by central banks provided a solid basis for gold prices during the recent downward trend. “These purchases will be the main driving force that pushes the precious metal to all-time highs of $2,100 in the new year.”
(Evrim Küçük/my economy)