- * The price of $2,000 an ounce is not far off in light of the possibilities of the Fed’s retreat from monetary tightening
The global gold market rose, as prices witnessed its best week in three years, amid the repercussions of what is happening to the US banking sector, whose effects have spread in some way to several countries in the world, according to what was mentioned by the Kitco platform, which is concerned with metal markets in the world, in the topic that was translated by today’s newspaper. what it says.
$2,000 an ounce
Analysts do not rule out gold reaching $2,000 an ounce, perhaps next week as markets look beyond the Federal Reserve’s monetary policy meeting scheduled for Wednesday, according to Kitco.
The precious metal rose from $1,867 an ounce to above $1,980 and $1,990 this week, recording gains of more than $110 and its best performance since March 2020.
Futures
April gold futures were trading on the Comex market at $1,988 an ounce, up $65 on the day.
Analysts see this as the biggest event that markets have been preparing for in a while, ahead of the Federal Reserve’s monetary policy meeting.
Markets are expecting a rate hike of 25 basis points on Wednesday, but investors are focusing more on the potential pause and rate cut that could follow.
After wild volatility in light of expectations of a rate hike this week, the gold market is in a winning position, according to analysts.
25 points
On that, Bart Melek, Global Head of Commodity Watch Strategy at TD Securities, said: “Markets are seeing that the Fed is going for another 25 basis point hike, so maybe stick with it for a while, we’ll see what happens.
He added: The view from gold’s perspective is that given the turmoil in the banking system and the US Treasury’s willingness to help, we may get facilities that allow inflation for a longer period at a higher level, and that’s a good thing for gold.
Melek added that the consensus in the gold market is that the Fed will have to ease interest rates before reining in inflation, which is a massive shift in perspective from just a few weeks ago.
Another 25 basis point hike could be interpreted as nothing more than a move by the Fed to preserve its credibility, said Everett Millman, precious metals expert at Gainesville Queens.
After Wednesday’s decision, Melman added, the Fed is unlikely to continue raising interest rates, because something will definitely break if the Fed continues to put its foot on the pedal.
European Central Bank
The European Central Bank raised interest rates by 50 basis points, sticking to its hawkish stance despite banking sector concerns and market turmoil.
Frank Cooley, a strategist, stated that this gave the markets confidence that the Fed will also continue with its current plans.
Go ahead, the market got its answer when the European Central Bank hiked by 50 basis points.
Analysts considered that inflation is high, and he does not believe that 2% inflation is realistic, so it is possible that they will break some sectors if they continue their position.
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