Gold price jumped from a three-week low on Friday after US job growth showed slower-than-anticipated growth in December. In other words, the daily went up, the weekly went down. The opinions and analyzes of the analysts who evaluated the next direction of gold. Cryptocoin. com we have compiled it for its readers.
“A slight decrease in real interest rates would be positive for the gold price”
“People are happy to buy gold at the bottom,” said Nicholas Frappell, global chief executive of ABC, because of the high yield at the end of last week’s close, the market still lags a bit.
Treasury yields rose last week after Fed minutes showed the possibility that the central bank could shrink its balance sheet sooner than expected. Gold is considered a hedge against high inflation, but is highly susceptible to high U.S. interest rates, which increases the opportunity cost of holding non-yielding bullion. Nicholas Frappell comments:
If inflation data turns a little warmer than expected, it will only confirm people’s expectations (aggressive tightening from the Fed). We may see some decrease in real interest rates and this will be positive for the gold price.
US inflation data, followed closely by investors, will be released this week. Core CPI, which was 4.9% in the previous month, is expected to increase by 5.4% year-on-year in December. The gold price predictions of Reuters technical analyst Wang Tao are as follows:
Spot gold could test the $1,801 resistance, above which a break could open a gain in the $1,815 to $1,830 range.
Gold still targets $1,800, according to Pablo Piovano
Given CME Group’s preliminary data for the gold futures markets, traders added nearly 5,000 contracts to their short positions on Friday, reaching the third consecutive daily increase. Along the same lines, volume has now extended its uptrend for another session with around 47.5k contracts.
According to market analyst Pablo Piovano, the rise in yellow metal prices on Friday was behind the increased open interest and volume, allowing for more upside in the very near term. In contrast, the analyst states that the $1,800 mark for gold remains the main target for the bulls for now.
How will the gold price be affected by the US CPI data?
The gold price jumped from a three-week low on Friday following the US jobs data. According to market analyst James Hyerczyk, this indicates that short-term gains will likely be limited by a longer-term view of rising interest rates. The analyst makes the following assessment:
The recovery in gold prices could be a sign that investors will continue to be driven by rising inflation data until the Fed’s rate hikes begin to have a meaningful impact on rising producer and consumer prices.
Analyst states that trades will take place in a short-term range until the release of US consumer inflation figures on Wednesday. Traders expect an increase of 0.4% in December. This means that the annual rate will increase even more. The analyst interprets the impact of future data in this direction as follows:
The price of gold could rise on the first news and weaken as investors begin to prepare for the Fed’s earlier-than-expected rate hike.