Gold price is unpredictable after 4 consecutive weeks of increasing
This week, Wall Street experts split when forecasting the direction of precious metals, due to the impact of the USD, the Fed and recession fears.
The world spot gold price last week increased by more than 1%, to $1,802 an ounce, recording a 4-week consecutive upward streak. However, the US inflation data in July did not help the precious metal break out.
The country's consumer price index (CPI) rose 8.5%, lower than forecast and inflation last month, but still around a 40-year high. Gold prices did increase after this data, but did not move higher than the important milestone of $ 1,800 as many expected.
This week, experts are divided again when forecasting the direction of precious metals. In a Kitco survey of investors, bankers and analysts, 45.5% forecast prices to continue moving up this week. 45.5% think that the market turned down. 9% expect prices to move sideways.
Movement of the world spot gold price in the past month.
A stronger USD is expected to continue to put pressure on gold prices this week. "The past few weeks, the price has been trading around $1,800. However, I think the USD will recover as retail sales and industrial output increase. This will cause gold to fall," Marc Chandler - Director of Bannockburn Global Forex says, "Initial support will be at $1,765".
Adam Button - currency strategist at Forexlive.com believes that US Federal Reserve (Fed) officials play a central role in restraining gold's rise. The Fed is forecast to continue raising interest rates, to close to 4% by the end of this year.
Even gold optimists are cautious when making judgments. "The gold price chart for December delivery shows that prices will continue to move up in the short term," said Darin Newsom Analysis Director Darin Newsom. "The near-term resistance is at $1,824, while the support is at $1,798. This causes the market to fluctuate in a narrow range and increases the possibility of a breakout, in both directions.
Another factor that could pull gold up is recession fears. "The market is increasingly convinced that the Fed can't bring inflation down significantly without triggering a recession. That's good for gold, even if the Fed doesn't shift its monetary tightening policy. We've seen that. We see a lot of economic data dropping before the Fed takes action," Day said.
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