The helping hand came from England as the precious metal dropped to the level of 1,615 dollars/ounce this week. The Bank of England took a step back from its decision to reduce bond purchases and announced that they would restart the program. However, it is warned that the pressure on gold will continue due to the Fed’s aggressive interest rate policy.
Evolution Small from EarthAccording to the article, after the UK’s announcement, the gold price rose to $ 1,660 with some relief in the market. Afterwards, prices were withdrawn to the range of 1.640-1.650. Analysts warn that the downtrend will continue as long as it stays below $1,680. Analysts say that the fact that the Dollar Index continues to trade at the highest level of the last 20 years makes it difficult to find a reason for an upward movement, and that the downward pressure on the gold price will continue if the Fed continues its aggressive interest rate hikes.
THE FOLLOWING LEVELS ARE CRITICAL
The first support for spot gold, which has depreciated by 20 percent since March, is at $1627/ounce today. Analysts expect the $1607-1600/ounce range to be targeted if this is broken. In possible reactions, 1690-1710 stands out as the first resistance zone. Under gram, the 950 lira level is seen as support.
WHY DOLLAR EATED?
Since the beginning of the year, an ounce of gold has lost more than 9 percent in USD terms. It has dropped almost 20 percent from its peak in March. The high inflation in the markets and the uncertainties in the economy should have created a situation that strongly supported the ounce gold prices. But he could not find the gold he was looking for. The depreciation of gold is explained as follows: The main reason for the loss in gold this year is the continued aggressive monetary policy tightening of the US Federal Reserve, and as a result, a very strong US dollar index was triggered. Interest rate hikes from the US continue to strengthen the dollar. Throughout the entire summer and September, the US dollar index hovered at the highs of the last two decades. This situation still puts a lot of pressure on gold. Economists think there is still room for an ounce of gold to go down.
While oil, gold, all risky assets are losing, positions are shifting to money. In fact, the so-called safe-haven gold is lost to the more reliable dollar during the stagnant economic period.
ING still gives gold a chance! An ounce of gold is in a bear market in December, however, markets are predicting that the price will rally above the $1900 level. According to the current economic outlook report published by ING, a rally will be seen under ounce as of next year. “As soon as the Fed signals the first easing in monetary policy, an ounce of gold will start a rally,” ING says. The only condition for the Fed’s monetary policy to be relaxed is to see that inflation will decrease significantly. ING predicts that the Fed will begin to lower interest rates in the second half of 2023. According to ING’s study on an ounce of gold, in the medium term, gold assets will gradually rise to $1,650, then $1,730 – $1,780, and then $1,840 and $1,900 per ounce in the medium term.