{"id":1998,"date":"2023-02-27T05:47:32","date_gmt":"2023-02-27T05:47:32","guid":{"rendered":"https:\/\/prendergast.net\/?p=1998"},"modified":"2023-02-27T05:47:32","modified_gmt":"2023-02-27T05:47:32","slug":"gold-at-risk-of-a-major-drop-as-prices-at-pivotal-point-analysts","status":"publish","type":"post","link":"https:\/\/prendergast.net\/?p=1998","title":{"rendered":"Gold at risk of a major drop as prices at ‘pivotal point’ – analysts"},"content":{"rendered":"
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Gold at risk of a major drop as prices at 'pivotal point' – analysts<\/strong><\/span><\/h1>\n

With the latest inflation numbers stressing out markets across the board, gold is at a "pivotal point," according to analysts who are not ruling out a deeper selloff if gold drops below $1,800 an ounce.<\/p>\n

This week's big surprise was the hawkish Federal Reserve meeting minutes, which revealed that "a few" FOMC members were leaning towards a 50-basis-point hike instead of the more dovish 25-bps increase adopted at the February meeting.<\/p>\n

On top of that, the Fed's preferred inflation measure — the annual core PCE price index — accelerated in January, coming in at 4.7% versus the expected 4.3%.<\/p>\n

"There's a major reset in how high rates will go. People are now thinking over 6%. That's significant enough that it is breaking gold's back," OANDA senior market analyst Edward Moya told Kitco News.<\/p>\n

If there is further momentum towards $1,800 an ounce, it could "get ugly" for gold, and prices could drop another $50, Moya added.<\/p>\n

At the time of writing, April Comex gold futures were trading at $1,816.60 an ounce, down for the fifth week in a row.<\/p>\n

"This is a pivotal point right here," Forex.com senior technical strategist Michael Boutros told Kitco News. "If we get a weekly close below $1,807-$1,805, you risk a big drop. And you could be looking at $1,750s."<\/p>\n

It is the macro outlook that is weighing on gold. In January, the precious metal rallied on the idea that the Fed could cut rates at the end of 2023.<\/p>\n

Now, the reality is starting to set in, Boutros explained. "And inflation numbers we got today are showing that. And that adjustment to higher rates is hitting the markets," he said.<\/p>\n

The good news for gold is that this rate re-pricing is also impacting the equity space. And if the S&P 500 and the Dow keep falling, gold might see some support as the safety trade, Boutros noted. "That should put some sort of floor under gold's price," he added.<\/p>\n

Geopolitical tensions are also not letting up, which is working in gold's favor in terms of finding a bottom in this downtrend.<\/p>\n

"People are throwing around all these big words like 'nuclear threats.' It is the first anniversary of the war in Ukraine, and it is time for a reality check. The threat is there. And if that threat becomes more prominent on a global scale and if these talks continue to deteriorate, at some point, that will factor in," Boutros pointed out.<\/p>\n

The volatility in the gold market is far from over, as prices can fall as quickly as they recover, said Gainesville Coins precious metals expert Everett Millman.<\/p>\n

"Given gold's nature to have these quick selloffs and recoveries during times of panic, there is not an extremely strong floor right now. I wouldn't be surprised to see gold break below $1,700, with expectations that it would come back up pretty quickly if there is an escalation in Ukraine," Millman told Kitco News.<\/p>\n

With markets realizing the difficulty in bringing inflation down to the Fed's 2% target, gold will remain vulnerable in the short term.<\/p>\n

"There is some support at $1,750, but then you don't have anything major until possibly $1,730. This is a major change in sentiment," Moya said.<\/p>\n

Next week's data<\/p>\n

Analysts will monitor the macro data scheduled for next week for any signs of weakness after a solid start to the year.<\/p>\n

"We cautioned that the stark contrast in weather between December's wintery, cold conditions … and January's almost spring-like temperatures played a big part in the strength of data," said ING's chief international economist James Knightley. "[Next] week, we will get a first test of that hypothesis with the ISM manufacturing and service sector reports for February."<\/p>\n

Monday: U.S. durable goods orders, U.S. pending home sales,<\/p>\n

Tuesday: U.S. CB consumer confidence<\/p>\n

Wednesday: U.S. ISM manufacturing PMI<\/p>\n

Thursday: U.S. jobless claims<\/p>\n

Friday: U.S. ISM non-manufacturing PMI<\/p>\n

By Anna Golubova<\/p>\n

For Kitco News<\/p>\n

Time to Buy Gold and Silver<\/a><\/u><\/span><\/span><\/span><\/p>\n

<\/p>\n

Tim Moseley<\/p>\n","protected":false},"excerpt":{"rendered":"

Gold at risk of a major drop as prices at 'pivotal point' – analysts With the latest inflation numbers stressing out markets across the board, gold is at a "pivotal point," according to analysts who are not ruling out a deeper selloff if gold drops below $1,800 an ounce. This week's big surprise was the … Continue reading Gold at risk of a major drop as prices at ‘pivotal point’ – analysts<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[290,291],"_links":{"self":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/1998"}],"collection":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1998"}],"version-history":[{"count":0,"href":"https:\/\/prendergast.net\/index.php?rest_route=\/wp\/v2\/posts\/1998\/revisions"}],"wp:attachment":[{"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1998"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1998"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prendergast.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1998"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}