351
138 shares, 351 points

Gold market trading conditions were volatile and two-sided, following mixed NFP report that found improvements in loose and strong wage growth metrics, with headline employment growth disappointing. Spot gold fluctuated on either side of the $1,790 level in recent trading after the NFP report. We have compiled market reviews and analysis of the market analystsdollar series Joel Frank and Haresh Menghani for the coming weeks for the readers ofKriptokoin.com .

yellow metal could return to 2021 lows according to Joel Frank

Gold surprisingly after analystsdollarserine report that it supports Fed’s tightening plans for 2022 became resistant. Earlier in the week, FOMC minutes laid out the stance. As long as labor market progress continues at the current pace, rate hikes will be warranted soon. Although the employment report did not seem to increase the market’s expectations for a near-term rate hike, it seems to have increased the market’s belief in the Fed’s long-term interest rate trajectory.

Generally, when real and nominal interest rates rise, this increase in the opportunity cost of holding non-yielding assets aggravates demand for precious metals. However, the yellow gold prices in US dollars are supported by the weakness in the dollar rate. Surprisingly for currency strategists, the dollar weakened in recent trading, despite the positive response to the latest jobs report in US bond yields. According to analyst Joel Frank, positions may be overstretched and money may struggle in the midst of taking profits. The analyst makes the following assessment:

In both cases, the weaker dollar makes the dollar-denominated gold price more affordable for international investors, thereby counteracting the negative impact of higher real interest rates.

Many currency strategists expect the dollar to rise further, given the recent rise in long-term U.S. bond yields this week, with growing belief in the Fed’s ability to return rates to pre-pandemic levels. guesses. In the week, 10-year nominal interest rates increased by more than 25bps, while 10-year real interest rates increased by more than 35bps. The analyst interprets this increase and estimates for gold:

Meanwhile, larger relative movements in real interest rates represent a fall in inflation expectations and reduce the attractiveness of inflation protection, which is a major reason investors buy gold. If current trends in the bond markets continue and the dollar starts to rise, gold could return to 2021 lows below $1,700 in the next few weeks/months.

Gold technical outlook: The market may have changed in favor of the bears

Technically speaking, this week’s rejection near the $1,830-32 supply zone, followed by The incoming drop may have changed the bias in favor of bearish traders. The analyst draws attention to the following levels:

The continuation of some selling below the horizontal support of $1,785 will reaffirm the negative outlook and lay the groundwork for a short-term depreciation move. Gold could then accelerate the downside towards the intermediate support of $1,770-69, the low around the $1,753 region in December 2021.

On the Flip side, the $1,800 mark coinciding with a technically important 200-day SMA is now acting as a strong resistance. The continued strength could trigger a short-term move and push the gold price towards the $1,815 hurdle. Some trailing buys could allow the bulls to bounce back to challenge a strong barrier near the $1,830-32 region.


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