Gold Weekly Forecast: Gold prices fell at the beginning of the week and fell below $2,000 on Monday. However, dovish Fed bets dominated the financial markets. It touched its highest level in more than a year near $2,050, and then declined sharply on Friday, retracing from its weekly high in the process. Growth data from China, and PMI survey from the US could drive gold (XAU/USD) price action next week due to its possible impact on the demand outlook for the yellow metal.
- After touching the highest level since March 2022 at $2,050, gold price declined sharply.
- The near-term technical outlook for XAU/USD showed that XAU/USD could extend its decline.
- Buyers may take interest if the $1,976 support area holds well.
- Gold Price Forecast: Gold will move towards $2,140 on breaking $2,078 – Neal Bhai
Fed Confirms Recession
This week, the minutes of the Federal Reserve’s March monetary policy meeting showed policymakers predicting a “recession” for the first time.
The minutes showed that many members of the Federal Open Market Committee were convinced that recession risks had resurfaced following the crisis in the banking system—which led to the collapse of several major banks, from Silicon Valley Bank to Signature Bank, as well as promiscuous explosions. Happened. of Credit Suisse. The turmoil has led to fears that banks could be overwhelmed by waves of withdrawals or “bank runs”, resulting in tighter credit conditions for borrowers – triggering a “global credit crunch” and eventually a recession.
2023 Gold has risen from the $1,800 level in early March to more than $2,055 an ounce – registering a huge gain of over 15% in the past month alone.
Gold prices have risen for the second quarter in a row – up almost 30% from the November low of $1,614 an ounce – the biggest rally ever!
We’re just a quarter of the way into 2023 and it’s already been a big year for the precious metal – but it could be the start of the best year since the Global Financial Crisis in 2008.
Gold Prices Ready to Fall
There is about an 80% chance that the Fed will raise its policy rate by 25 bps in May to a range of 5%-5.25%, according to the CME Group Fedwatch tool. However, the probability of the policy rate staying at that level until September is now less than 20%.
On Friday, the US Census Bureau reported that retail sales fell 1% on a monthly basis in March to $691.7 billion. This reading is worse than the market expectation for a contraction of 0.4%. Despite the disappointing data, bullish Fed commentary helped the USD limit its losses ahead of the weekend.
Federal Reserve Governor Christopher Waller argued that recent data showed the Fed had not made much progress on its inflation target and noted that rates needed to rise further. “Monetary policy will need to remain tight for a substantial period, and for much longer than markets expect,” Waller said. in March. In turn, USD continued to gain strength ahead of the weekend, forcing XAU/USD (Gold) to erase its weekly gains.
Comments From Fed
Market participants will also pay close attention to comments from Fed officials. Nevertheless, policymakers are likely to refrain from committing to any future decision beyond May and this past week’s market action shows that investors are more interested in what could happen later in the year.
In its latest economic projections, Fed officials now expect economic growth tobe slightly slower thisyear, and inflation slightlyhigher, than they predicted in December. They also forecast raising interest rates to 5.1 percent by the end of 2023, before coming down to 4.3 percent by the end of 2024
The core PCE inflation rate is projected by FOMC members to be 3.6% in 2023, up from 3.5% in December. The Fed has a long-term target of 2% annual inflation.
Based on recent data, GoldSilverReports.com predicts a rise to 6% in 2023 before falling back down to 4.25% in 2024 and 3.25% in 2025. GSR analyst Neil Bhai, on the other hand, is skeptical that the Fed will continue raising rates throughout 2023 and has predicted lower rates of 3.75%-4%.
The Fed rate is currently 4.75% to 5%. After sitting at 0% for morethan a year during the coronavirus pandemic, the rate has-steadily climbed since March 2022 asthe Federal Reserve aims to combat rising inflation.
