Gold likely heading to $1800

30 июн. 2022 г.

Strong US dollar and rising interest rate expectations continue to weigh on the precious metal, with the metal once again unable to benefit from the ongoing risk aversion in the markets. With gold prices almost back to the same levels as the early parts of 2022, the outlook doesn’t look great – at least for now. Something must change fundamentally to trigger a potential rally. But in the short-term there is the risk we will see further losses as more and more support levels break down. It looks like a revisit of $1800 is likely from here.

Contrary to popular belief, gold hasn’t shown anything to suggest investors view it as a “safe-haven” asset. You would think with growth fears on the rise and inflation anxiety increasing, the metal would be able to put on a strong showing. That hasn’t been the case obviously, with investors dumping everything – from stocks to gold to crypto – in an environment of rising inflation, interest rates and interest rates expectations.

Going forward, we would like to see a confirmed technical reversal signal before turning bullish on gold, as it hasn’t shown any signs to suggest it would stage a recovery with the Fed growing more and more hawkish. As things stand, we think $1800 and potentially lower is on the radar until the time when the Fed’s future rate hikes are fully priced in – possibly late this summer.