Analisdollarser told Kitco News that next week will be hot due to US data. According to analisdollars, the gold price will closely follow inflation expectations as the commodity continues to increase.
Bart Melek: The price of gold is well positioned to climb above $ 1,800
For now, the gold market is ignoring the perfect storm of low interest rates, more government spending and rising inflation expectations. However, next week, the market may test the Federal Reserve’s policy stance. All eyes will be on the board of what appears to be very powerful macro data, including manufacturing and employment reports. Bart Melek, head of global strategy at TD Securities, told Kitco News:
The price of gold is in a good position to climb above the $ 1,800 level. In the second quarter, the US will see significantly better data than expected. It is very important to look at ISM production next week. Payroll figures are very important. In general, any upside surprises raise inflation expectations. This becomes a good catalyst by lowering the actual rates for gold. Normally it works the other way around. However, markets are beginning to believe that the FED is determined to keep warm. And as inflation rises, we are unlikely to see a big increase in returns. Good for gold…
What are the important macro data for the next week?
ISM manufacturing PMI ends on Monday and the April work report will be released on Friday. Other key macro data for next week include factory orders on Tuesday, ADP non-farm payrolls on Wednesday and ISM non-manufacturing PMI and Thursday’s jobless claims. Better-than-expected data could put pressure on the Federal Reserve, which says it is too early to start buying back monthly asset purchases this week. Commenting on the markets, James Knighdollarsey, ING chief international sti, said:
We suspect that the Federal Reserve will be forced into a policy tightening earlier than 2024 for the first rate hike that the Federal Reserve is currently pointing to. Especially to support the pandemic with 4 trillion dollars of financial support in addition to the already spent 5 trillion dollars.
Kevin Grady: There is inflation so gold needs to rise
Psychologically important, the $ 1,800 level seems unattainable for gold right now, despite all the positive factors surrounding the precious metal. Kevin Grady, president of Phoenix Futures and Options LLC, commented on the markets and added:
While everything is going on, the price of gold should rise and not. Everything is rising for gold. Commodities are currently shedding paddles. US construction is burning padlocks. Inflation will really come, especially with new infrastructure.
Also, when the government starts participating in construction tenders across the US, commodities will rise further, Kevin Grady explained that the US government is not a discount buyer. Kevin Grady added the following to his comments on the subject:
There is inflation and therefore gold has to rise. However, problems will arise when the government finally realizes that it cannot control inflation after raising it above 2%. But if gold is not collected in an environment, we see inflation, what will happen when they raise the rates?
Sean Lusk: Gold will trade horizontally until it hits a rally above $ 1.800
Kevin Grady stated that by blaming the popularity of cryptocurrencies for the decline of gold, Bitcoin distracted investors from gold. From a technical point of view, Walsh Trag co-director Sean Lusk told Kitco News that the $ 1,800 level had dropped 5% since the beginning of the year. Sean Lusk commented on the markets and said:
You have sellers rising at these levels. The price of gold will trade horizontally until it hits a rally above $ 800. All the rage in the market continues to be cryptocurrencies despite seeing some exits. In order for gold to consistently rise above $ 1,800, the market will need to be convinced that the US will see inflation not only temporarily but constantly.
Sean Lusk also stated that new record highs in the stock markets are limiting gold’s earnings. “The continued entry into the stock market during the 10-year rise in Treasury yields did not encourage too much investment in metals,” Sean Lusk said.
Bart Melek: The stock market rising in the middle of a strong earning season is also holding gold
Bart Melek, head of global strategy at TD Securities, said other parts of the world should also start to improve and added:
This means a permanently weaker US dollar. The stock market, which rises in the middle of a strong earning season, is also holding gold. Equity markets performed very well, even though the returns were negative. Investors have a reluctance to position themselves in assets that do not generate returns. However, the momentum in the stocks series should slow down a little, which will help gold.