This level of gold prices will ignite an even bigger rally, according to analysts. Gold could be ready for even bigger gains after a strong break above $1,850 an ounce. However, according to analysts, the precious metal must surpass this level first. Details Cryptocoin. com
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Gold prices will go higher
Inflation, which has hit 30-year highs in the US, has pushed investors into gold, with the precious metal rising nearly 3% this week and December Comex gold futures trading at $1,865.90. “It’s all about inflation,” Frank Cholly, senior market strategist at RJO Futures, told Kitco News. The market is starting to embrace the fact that inflation will last longer. Due to the pandemic, all the incentives and tons of pent-up demand, it will take years to fix supply chain issues. “$1,835-1 for all eyes gold. $875 will be in the $$ trading range. A move below indicates the end of the current rally, while a move above could trigger a move towards $2,000 an ounce. The analyst says: “The critical thing to sustain this breakout is for the market to hold $1,835. We want to keep the prices up there. On the other hand, a close above $1,875 would ignite a secondary rally to $1,900-25. I think we could see $2,000 by the end of this year. ”
Cholly explained that this is how technical buying works. If the upper trading range is removed, people will start to feel the fear of missing out which will trigger more buying. Analyst: “Most commodities, especially energies, have been very strong lately and gold has been stuck in a sideways market for the past five months. “The idea that gold should be an inflationary hedge is accepted,” he said. Walsh Trading co-director Sean Lusk said the path to $1,900 is now very clear. Luke: “1. Gold below $800 was seen as a good buying opportunity. We have to watch if the banks come in and hedge this thing. Expectations are good for the first few months of 2022. January and February,” he said.
FED policies will be effective
Bart Melek, head of global strategy at TD Securities, said there’s a good chance that gold will get some breathing room before rising next week. Gold will need to rise above $1,875 an ounce to attempt to run to 2020 record highs of over $2,000. Angel: “It’s two more months before the Federal Reserve moves on to a more hawkish narrative. In the meantime, we could see significant levels below as more people start to say the Fed’s inability to fight inflation. “It could be an all-time high by early 2022.” As the Fed gets more hawkish and starts raising rates, gold’s first reaction will be to go even lower. Melek noted that gold can still gain in the long run as the Fed continues to tighten slowly. “If the Fed funds rate rises by 25 basis points and inflation is hovering at 4.5%, that’s still a very supportive policy,” said the angel.
The two most important macro events to watch next week will be Tuesday’s retail sales and industrial production reports. “October retail sales and industrial production reports are the highlights of the week ahead and both should be strong,” said James Knightley, ING’s chief international economist. Retail sales will rise with a 6% monthly increase in new vehicle units sold, while gas station sales will increase by 6%. “Industrial production should see good production growth according to the ISM report already published,” he said.