While the price of the ounce of gold fell to the $ 1,784 level in yesterday’s transactions, holding its lowest level in about 1.5 months, it has completed 5 consecutive trading days with a depreciation. While gold in ounces showed a horizontal performance in the first half of the year, many analysts say that gold prices in ounces could enter an uptrend in the second half of the year. The high inflation trend in the US has reinforced the expectation that the US Federal Reserve (Fed) would further accelerate the rate hike. Gold prices in ounces are also under pressure from this situation. On the other hand, Fed rate hikes to prevent rising inflation are expected to increase the risk of recession. This supports gold prices and the decreases are limited.
MAIN CATALYST ON GOLD
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The next meeting of the Federal Open Market Committee (FOMC), which sets the Fed’s monetary policy, will be held July 26-27. The Fed is expected to raise the policy rate by 75 basis points at this meeting. In addition, markets will closely follow the economic projections announced by Fed Chairman Jerome Powell for the periods following the interest rate decision.
While expectations that the Fed may accelerate its rate hike strengthen the dollar index, the US is increasing bond yields; on the other hand, it suppresses precious metals such as gold and silver. However, with the decline in risk appetite in the markets and the satisfaction of investors’ liquidity needs, there have been special movements in recent days. While US 10-year bond yields fell to their lowest level in about a month; Ounce gold prices rose to a high of $ 1,807 on the last trading day of the week. While the ISM manufacturing index in the US fell below market expectations and saw its 2-year low at 5pm Turkish time yesterday, underscoring that the US economy has lost momentum; recovery was observed under the ounce after data. While the price of the gram of gold started the day with a decline, it recorded the highest level of 974.17 Lira and the lowest level of 961.09 Lira during the day. While the main catalyst for gold prices in grams was the ounce of gold; With the effect of the decline in gold, the gram of gold continues its downward movement.
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MAY AFFECT ABOVE
Rıdvan Baştürk, founder of Baştürk Financial Consulting, drew attention to the following regarding gold prices: “We are in a process where recession fears are increasing along with expectations of high inflation on a global basis. The poor disclosure of nearly all data from the United States, in particular, raises concerns about the recession. The US economy is also expected to contract in the second quarter. On the European side (especially in Germany), economic activities are losing momentum. Against this backdrop, we see risky assets remain under pressure in the big picture. There are also decreases in US 10-year bond yields. Interest rates, which were around 3.50 percent two weeks ago, fell to 2.93 percent this week. However, as interest rates fell, the value gains I had expected in instruments like the ounce of gold and the Japanese yen did not come. I expect inflation, recession and falling interest rates to affect the upside on the gold side of the ounce. It is foreseeable that the decreases that may occur in the short term will give a buying opportunity for the medium to long term. Technically, the $ 1,780-1,760 range should be seen as the critical region here. “