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Markets Continue Their Fed-Focused Movement! How will the price of gold follow the direction?

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The price of the ounce of gold continues its movement focused on the US Federal Reserve (Fed). Continuing its movement in the narrow band for a while, gold showed a limited rise following Fed Chairman Jerome Powell’s remarks yesterday. Fed Chairman Powell, in his speech to the US Senate Banking Committee, said there is a risk of recession, but it is currently not high; “Inflation surprised us on the upside, we may face other surprises,” he explained. Following Powell’s remarks pointing out that the possibility of a recession is on the table, investors leaving risky assets have turned to safe havens.

GOLD RISES EVEN AFTER THE DECISION

On Wednesday, the Fed made its highest interest rate hike in 28 years, raising the policy rate by 75 basis points in line with market expectations and bringing the interest rate to 1.75%. Powell warned at the press conference that the interest rate would be between 3 and 3.5 percent at the end of the year. Gold prices, which prior to the Fed’s critical decision were at $ 1820, then rose to $ 1841.

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The next meeting of the Federal Open Market Committee (FOMC), which sets the Fed’s monetary policy, will be held from 26 to 27 July.

Özsoy, co-founder of Biz Financial Consulting, in his assessment on hurriyet.com.tr, drew attention to the effect of US 10-year bonds on gold prices; “As long as the US 10-year bond rate is higher than 3%, it would make sense to take a position on the gold side of the ounce during this time; Because I think if it falls below 3 percent, there will be strong upward momentum below the ounce. “

While the Fed tightening of monetary policy strengthened the dollar index; It also pushes US bond yields up and suppresses gold prices with the effect of inverse correlation. On the other hand, the Russia-Ukraine war and rising global inflationary pressure support gold prices with the support of a safe haven asset.

THE LAST SITUATION OF GOLD PRICES

While the price of gold per ounce rose from $ 1840 to $ 1847 following yesterday’s statements by Fed Chairman Powell; he started the fourth trading day of the week at $ 1837. An ounce of gold today is as high as $ 1838; while seeing the lowest level of 1831 dollars; In these minutes it is moving to $ 1835 with an increase of 0.15 percent.

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Markets continue their Fed-centric movement as the gold price will follow

While the price of the gram of gold started the new day with a decline; During the day it recorded the highest level of 1026.68 lire and the lowest level of 1020.30 lire. Gram gold, although rising due to the increase in the dollar rate, stood at 1024.82 lire with an increase of 0.15 percent starting at 10:45. In the same minutes, a quarter of gold is exchanged for 1688 lire and the gold of the Republic for 6 thousand 946 lire.

While the prices of gold gram were moving at the level of 1026 lira at the closing time of the Turkish markets yesterday; started the new day at the level of 1023 lire.

Markets continue their Fed-centric movement as the gold price will follow

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THE NEXT CHANCE OF GOLD IS MORE
Murat Özsoy – Co-founder of Biz Financial Consulting

Markets continue their Fed-centric movement as the gold price will follow

The ounce gold price continues to be influenced by Fed Chairman Powell’s speech this week after last week’s Fed meeting and, as a result of these effects, has failed to maintain a hold above the resistance of the dollar of 1844. On the downside, it does not fall below the support formed at the levels of $ 1820 and continues its movement in this band gap.

At the moment, I see the likelihood of the price of gold breaking the upward resistance of $ 1844 more than the likelihood of it entering a downtrend. In this case, the important indicator will be the yield on US 10-year bonds and the possibility of a downward move from 3.15% is considered high this week. As long as the US 10-year bond rate is 3% higher, it would make sense to take a position on the gold side of the ounce during this time; because if it falls below 3 percent, I think there will be strong upward momentum below the ounce.

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As for gold in grams, we are following a course due to a slowdown in the rapid uptrend we have seen in the dollar-TL exchange rate in recent weeks. I think the dollar-TL stagnation is temporary considering the current economic outlook. Therefore, in the context of the upside potential of the ounce of gold and the exchange rate, it is highly likely that the price of the gram of gold will rise from these levels.

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