Gold is trading above $1,750. Bullion is showing some interesting signs of a rebound, or at least a stabilisation, despite the brilliant performance of the greenback and the fact that 10-year treasuries yields are still above 3%, both bearish factors for precious metals, in normal circumstances.
Indeed, the dollar index jumped in the first part of this week to 109, reaching a two-decade high.
In an unusual move, various commodities in fact gained ground despite the strength of the US currency. WTI returned above $94, while the north European Brent jumped to $100. Gold was not an exception and held above $1,750, confirming its resilience in the current scenario.
Some banks are now forecasting a further increase in gold prices by the end of the year.
Commerzbank for example is now predicting that gold will trade at $1,800 by the end of 2022 (2.5% above its current price).
Investors are now focusing on the upcoming Jackson Hole economic symposium, where the chairman of the Federal Reserve, Jerome Powell, and other policymakers could reveal some further information about the next steps that will be taken by the Federal Reserve, in order to counteract rising inflation.
The markets are now pricing in an interest rate hike of between 0.50 or 0.75% in September’s meeting, followed by another 0.50% increase in rates by the end of the year. After announcing rate hikes at every single meeting so far this year, the US central bank is forecasted to be much less active in 2023. According to the current market expectations, rates should remain stable between 3.50 and 4.00% during H1 2023 if there are no further inflation shocks.
From a technical point of view, gold is now close to the important support zone of $1,750, while the next key levels to monitor are placed at $1,720 and $1,680. On the other hand, we could see a trigger to the upside if the price rises above $1,790 and if it breaks above the resistance placed at $1,820.
Carlo Alberto De Casa is an external Market Analyst for Kinesis Money, responsible for updating the community with insights and analysis on the gold and silver markets. Carlo provides regular commentary for UK notable outlets including the BBC, Telegraph, The Independent, Bloomberg, FX Empire and Reuters.
With a credential background in Economic Finance and International Exchange (MA), his critical analysis on gold and silver’s markets performance is frequently quoted by leading publications, week-on-week.
This publication is for informational purposes only and is not intended to be a solicitation, offering or recommendation of any security, commodity, derivative, investment management service or advisory service and is not commodity trading advice. This publication does not intend to provide investment, tax or legal advice on either a general or specific basis.