Gold Prices Rise for Three Weeks: New High in Sight?
While the producer price index (PPI) released on Friday exceeded expectations and put some pressure on the precious metals market, gold $Gold - main 2408(GCmain)$ prices closed firmly at $2,400 an ounce for the second week in a row, just 1% away from their all-time high.
Analysts believe that gold's consolidation phase is coming to an end, and another record high is possible in the near future.
Robert Minter, director of ETF strategy at abrdn Inc., said：
The June CPI report showing a significant cooling in inflation, coupled with Powell's dovish remarks in his congressional testimony, were the two factors driving the long-awaited rally in the gold market. With the labor market slowing, the Fed needs to act now. The CME FedWatch tool shows the market sees a more than 90% chance of a rate cut in September.
Naeem Aslam, chief investment strategist at Zaye Capital Markets, said a September rate cut is now a foregone conclusion. Although there are some important economic reports due next week, some market analysts do not expect the data to materially change market expectations, which will continue to support gold's new momentum.
Commerzbank commodities analyst Carsten Fritsch also believed:
Gold will hit an all-time high next week. He noted that a September rate cut is now almost a complete certainty, with another rate cut coming before the end of the year. As a result, gold prices could return to May's all-time high in the coming days.
Meanwhile, markets are looking ahead to next Thursday's interest rate decision by the European Central Bank, which is expected to keep rates unchanged after cutting rates in June. In a report this week, the World Gold Council noted that investment demand for gold in Europe picked up last month, coinciding with the rate cut.
FX Empire analyst James Hyerczyk said:
Gold is heading for a third straight week of gains and could set a new record before the end of the year, as an improving U.S. inflation picture boosts market expectations of a Federal Reserve rate cut in September.
Analysts pointed out that spot gold fluctuated in yesterday's wide range on Friday, and the K chart shows that investors are uncertain and volatility is imminent.
Gold is still trading near its all-time high of $2,450.13 an ounce, well supported by its 50-day moving average of $2,347.49. As with the Fed, traders are now very dependent on economic data, which could lead to higher volatility in the gold market.
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