Unraveling the Retreat: Exploring the Future of Gold Prices Amidst Dollar Weakness
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The retreat of the gold price to around $1,900 per ounce has sparked questions about its future trajectory. As market participants analyze the situation, they wonder whether the "King of Metals" will find support at this level, providing a springboard for a potential rebound.
Seeking insights into this matter, we turn to the expertise of a Squared Financial analyst. Despite recent inflation data from the US showing a downward drift, there appears to be an unexpected push in the price of gold. This begs the question: Isn't gold traditionally considered a hedge against inflation? While it is, the analyst explains that the current movement is primarily driven by a weaker US dollar. Lower-than-expected inflation has led to a shift in market expectations regarding the Federal Reserve's future rate hikes. Consequently, the data suggests that the Fed's ability to implement further rate hikes may be limited. This dynamic is driving the upward momentum not only in gold but also in other commodities.
FXMAG.COM: The gold price has made a retreat to the vicinity of $1,900 per ounce. What's next for gold prices - will the King of Metals find support there from which to bounce?
Squared Financial analyst:
The gold price has made a retreat to the vicinity of $1,900 per ounce. What's next for gold prices - will the King of Metals find support there from which to bounce?
After yesterday's inflation data from the US, some traders might be confused about why Gold is pushing up despite the fact that inflation is drifting lower. Isn't Gold a hedge against inflation? Yes, it is, but the move is driven by a weaker dollar. Lower-than-expected inflation shifts the market's expectations about how many rate hikes are left from the Fed. After today's data, the Fed might not be able to do any more rate hikes, and this is what's driving Gold and other commodities. In the meantime, $1955 is a solid resistance, but it's safe to say that Gold will be able to advance toward $1970 in the coming weeks.
