The gold price fell as the US Federal Reserve (FED) signaled for faster rate hikes. However, it rebounded from a three-week low on Friday after the release of data showing slower-than-expected US job growth to close the week at around $1,790. So, what kind of movement can be expected in the precious metal in the coming weeks?
What are the expectations for the gold price?
UBS analyst Giovanni Staunovo said: “Less jobs added in December than expected, but the US unemployment rate fell to a multi-year low; “Somehow it was a mixed report for gold.” Standard Chartered analyst Suki Cooper said: “Stronger-than-expected pressure was more likely to lower prices, but weaker pressure did not significantly change market rate hike expectations. “The gold price response shows that the market is more focused on inflation risks ahead of the FOMC meeting.” As we reported on
Kriptokoin.com , Fed minutes released on Wednesday suggest that officials expect the central bank to reduce its overall asset purchases and cut interest rates earlier than expected to fight inflation. showed that they were discussing the upgrade.
Is the appetite for gold curtailing?
The price of gold has suffered its worst loss since Thanksgiving week, despite gaining on Friday after a report on the US labor market showed the country created 199,000 new jobs in December. Jeff Wright, chief investment officer of Wolfpack Capital, stated that this figure is a huge loss. 199,000 new jobs in December came in well below the sdollarser’s estimate of 422,000 jobs surveyed by The Wall Street Journal. “My biggest concern is wage inflation,” Wright said, using the following statements:
Generally speaking, if the Federal Reserve is most concerned with inflation, then these data are problematic. If the Fed values higher employment levels and increases labor force participation rates above 62.5 percent, it’s not problematic. This is why the reaction underneath is initially silent.
Wright knows that the market’s Fed tapering is moving along with monetary tightening, but says that “mixed signals have recently become a backdrop for gold.” According to Wright, for now, until the direction is determined, the price of gold will be traded in the range of $ 1,750 to $ 1,825 an ounce. Meanwhile, the 10-year US Treasury bond traded near the highest levels since the end of March 2021. This is thought to blunt the appetite for precious metals.
Eyes on US CPI data
AvaTrade chief market analyst Naeem Aslam said, “traders are now saying that the Fed is serious about controlling inflation, and that a tight monetary policy as a result.” They don’t know that you have adopted it,” he said, adding that the weight of gold has decreased. Indeed, the minutes of the Fed’s last meeting in 2021 showed that policymakers may be inclined to take a more aggressive path. Aslam thinks traders haven’t seen the Fed change its monetary policy path, even after Friday’s jobs data. “Expectations are still three rate hikes this year, which keeps the gold price in check,” he said.
Finally, Insignia Consultants research director Chintan Karnani said that investors will be looking at inflation figures and trends in the US stock market next week to see the next move in gold prices. US consumer price index data for December will be released on Wednesday.