Gold made a recent rally this week triggered by the Middle East conflict. This fact made Wall Street experts cautious though optimistic about the asset. At the same time, retail investors are still bullish.
Despite the recent gain, gold is still suppressed by high bond yields. They continue delivering unexpected headwinds for the asset. Nevertheless, the precious metal managed to make another run into the previous weekend featuring spot gold price above $2000 per ounce.
The recent rally forced some traders to get into long positions. Most of them expect the political situation to get worse. However, the majority of market participants remain bullish despite the price increase. What all experts agree on is that gold is about to make a big move. The only problem is that no one knows what direction it is going to take.
All parties expect the FED’s decision this Wednesday. Some analysts believe the Federal Reserve is not going to hike rates. It is more likely they will hold them between 5.25% and 5.50%. It will leave the opportunity for the next hike in December. Although inflation is not dropping, it keeps enough numbers to keep the current rate.
While the Treasury yields remain pretty high, they will prevent gold from moving up even despite the bullish market. On the other hand, if the Middle East conflict develops, it will trigger another round of bulls.
In simpler words, we can see a big move in both directions. As for the experts, they share different forecasts. According to recent surveys, more than half of respondents (54%) expect to see higher gold prices next week. Less than 30% expect the precious metal to drop and 18% remain neutral.
All market participants wait for the main economic event taking place this Wednesday. The FED will announce its decision on the interest rate. What’s more, we are going to have another crucial week for the U.S. labor market with the nonfarm payrolls report to be released this Friday. Also, investors will keep an eye on other major central banks with the Bank of Japan and the Bank of England to announce their monetary decisions as well.
May the trading luck be with you!