Gold prices rose strongly on Friday as markets ramped up bets that the Federal Reserve will ease its tightening cycle after its November meeting.Analysts are now closely watching U.S. third-quarter GDP data and corporate earnings due this week for a better understanding of the state of the U.S. economy.
Gold futures for December delivery rose more than $20 on the day on Friday and were last at $1,657.80 an ounce, after hitting a fresh two-year low and nearly breaking key support at $1,620 earlier last week.
The reason for the higher price of gold is that the market re-examines interest rate expectations. The Wall Street Journal previously reported that,Fed to discuss future rate hikes after 75bps hike in November。
Edward Moya, senior market analyst at OANDA, said: “WeMay see the Fed debate whether it should slow the pace of tightening, the idea really got investors excited. “
Before Friday’s news, markets were pricing in a 75 basis point hike in November and another 75 basis points in December.Now, if the Fed does debate, it could easily justify a 50 basis point hike in December. Additionally, Moya noted that the U.S. economy may begin to see the impact of the first rate hike.
He said: “Friday’s rebound was impressive. Gold held at $1,620 an ounce as expectations for rate hikes shifted. Gold may have escaped that. This week is the crux of earnings season and the market has A lot of potential for volatility, and I tend to be bullish this week. We may see support for the idea of a Fed slowing.”
Moya is closely watchingU.S. third-quarter GDP data released on Thursday. Economic growth is widely expected to recover to 2.1% after two quarters of negative growth.
“The GDP data is a big variable,” he noted. “After two bad quarters in a row, we should have turned better. There are a lot of factors that could complicate what’s going on here. The risk now is that something goes wrong with the economy.”
From a technical point of view, the price of gold is still in a downtrend, and the risk is tilted to the downside.
Sean Lusk, co-director of Walsh Trading, said: “Technically, it’s better to settle at current levels, otherwise prices could drop another 5% to $1,560 and then $1,470-$80. This is technically forming. “But from a bargaining standpoint, gold prices have suffered a six-month decline after hitting highs above $2,000 an ounce in March. When will it end? How much does it fall to be stable? “
Lusk warned that there is a risk that gold prices could fall another $100 before bottoming out. “The $1,620 level needs to hold in the near term, which is a potential double bottom on the chart,” he said. “Investors have been selling on rallies. We’ve bottomed recently, so I’m bullish on this week. But at the Fed in November Before the meeting, everything was unknown.”
Gold is currently in uncharted territory, said Gainesville Coins precious metals expert Everett Millman, noting that prices are well below some of the key trading levels seen earlier this year.
“It will be interesting to see how quickly these rate hikes reduce inflation,” he said. “While higher rates are bad for gold, rates of up to 5% are still below inflation, meaning real rates are still negative. So if the Fed changes its stance next year, we will see a gradual reaction in gold prices.”
At 10:43 on October 24, Beijing time, it was reported at $1,655.02 per ounce.