Hossam Abdel Nabi (Dubai)
Gold is currently technically testing the support level at $1930, which made a number of financial analysts confirm that the yellow metal is currently standing at a crossroads between continuing the downward waves or launching towards record levels of rise.
They told Al-Ittihad that the downgrade of America’s credit rating led to a rise in fears and a significant weakening of risk appetite in the markets, stressing that the expectations of the US Federal Reserve stopping raising interest rates will give upward strength to the price of gold in the medium and long term.
They stressed that the successive rises in high interest rates raised the opportunity cost of owning the precious metal that does not generate returns, pointing out that gold recorded the highest demand from central banks in the first half of this year, as central banks around the world added a record amount of gold to their reserves during the first half. From 2023.
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Charo Chanana, a strategic expert in Asian markets at Saxo Market, believes that gold recorded the highest demand from central banks in the first half of this year, as central banks around the world added a record amount of gold to their reserves during the first half of 2023.
She added that, according to the data of the World Gold Council, net gold purchases of central banks amounted to 387 tons during the first half of the year, and that was the highest total for the first half of the year since the organization began compiling quarterly data in 2000, noting that the People’s Bank of China was the largest. Buyers, followed by Muntari Singapore, while Turkey became a net seller in the second quarter due to local market dynamics.
Prices recover
Vijay Valesha, head of the investment department at Century Financial, said: Gold prices traded positively last Thursday, after they managed to recover from their one-month lows recorded in the previous session, as the US dollar index fell ahead of inflation data. The highly anticipated American.
He explained that this data could affect the US Federal Reserve’s decisions related to future interest rates, and the spot gold price increased by 0.2% to $ 1918.24 an ounce, as it trades near its lowest level since July 10, which it reached on Wednesday, while gold contracts were The dollar is stable at 1951 dollars, indicating that the US dollar index was trading down by 0.08%, which makes the precious metal cheaper for foreign investors.
Valecha believes that any greater-than-expected decline in core inflation figures could reinforce deflationary trends and give support to gold prices, especially since high interest rates have raised the opportunity cost of owning the non-return-yielding precious metal, which has fallen by more than 7% since the rise. Close to its highest levels in May, hinting that very high levels of underlying inflation and tense labor market conditions may discourage the Federal Reserve from cutting interest rates this year, and this will put negative pressure on the yellow metal.
Valesha stressed that traders see an 86.5% chance of not raising interest rates at the next Federal Reserve meeting in September, and accordingly they expect the central bank’s next step to cut interest rates, most likely in the spring of 2024, noting that interest rate expectations Gold will turn optimistic when the markets begin to price in the prospect of an interest rate increase from the Federal Reserve.
Keep an eye on the markets
Rania Gul, market analyst in the Middle East at XS.com, believes that the price of gold stands at a crossroads with the approaching weekend, coinciding with the rise of the US dollar and US Treasury bond yields, as traders and investors await more important events in the markets, which include Chief among them is the Non-Farm Payroll data due later today.
And she said: The downgrading of the credit rating of US sovereign debt to AA + from AAA by Fitch Agency, led to a rise in fears and a significant weakening of risk appetite in the markets, especially after Treasury Secretary Janet Yellen criticized the rating downgrade, describing it as “arbitrary” and outdated. , which made the movement of gold prices against the dollar weak and sideways, confirming that concerns about US debt also increased after the US Treasury announced last Wednesday that it would seek to issue $103 billion next week, up from $96 billion last time.
Gul confirmed that, on the other hand, the market now expects that the US Federal Reserve is close to the end of the cycle of monetary tightening and raising interest rates, which will give upward strength to the price of gold in the medium and long term.
She stated that the analyzes show that future gold price fluctuations were fading recently, but they rose in the past few trading hours, which indicates the dominance of uncertainty in the markets and the possibility of a large movement of price fluctuations soon.
She explained that from a technical point of view, the price of gold is currently testing the support of the trend line at $1930, and in the event of a price breaching downwards, the next support is likely to be in the $1885 and $1895 regions, as this price area includes a series of previous bottoms and the 200-day simple moving average level. (SMA) and the 38.2% Fibonacci retracement level for the move from 1614 to 2062 dollars, pointing out that in the bullish scenario, the resistance might be at the level of the recent top at $1950, followed by the stubborn resistance at the level of $2000.
2023-08-12 21:22:56
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