2023-06-24 09:39:18
Thursday 22 June 2023 | 02:43 p.m
The price of gold is now without workmanship
“Bloomberg Intelligence” said that “fear and uncertainty” may dominate the markets, especially since the economic slowdown in the second half of the year may lead to selling in the stock market, and thus move these flows towards the safe haven gold, which may push prices towards 3000. dollars an ounce.
In the context, Mike McGlone, chief macroeconomic analyst at Bloomberg Intelligence, said, “Central bank purchases of gold and the possibility of a global economic slowdown, against the backdrop of a period of interest rate hikes, may pave the way for gold to move towards $3,000 an ounce.”
Fed tightening
The report indicated that one of the main drivers for maintaining the Fed’s tightening is the strong stock market, and this is what prevented gold from rising, as US Treasury bonds achieved returns of about 5% and the S&P 500 index rose by about 15% in 2023. But this performance will not continue.
Gold will receive a new bullish catalyst
He said, “Bloomberg Economics’ expectations for the second half of the year are that gold will receive a new catalyst for the rise, which is the decline in the stock market,” as it is likely that the inflows withdrawing from the stock market will go to gold, which will raise the prices of the precious metal.
The report added that if the stock market continues to climb, the Fed is likely to keep interest rates high.
McGlone indicated that gold is awaiting a shift in the Federal Reserve’s policy, or prices are supported by intensive purchases from central banks around the world, noting that gains in the stock market are likely to be short-lived due to the upcoming deflationary recession. This is good news for gold bulls who want to see gold trade sustainably above $2,000 an ounce.
Another forecast for gold
On the other hand, Commerzbank analysts lowered their forecasts for gold prices during the second half of this year by $50 to $2,000 an ounce, after expectations of the Federal Reserve’s continuation of the monetary tightening cycle.
Economists at the Deutsche Bank revised their gold forecasts after last week’s Federal Reserve meeting. They said: “We now expect another rate hike in July, with no interest rate cuts until the second quarter of next year (previously Q1). This is also likely to delay any sustained rally for the precious metal.
The bank’s analysts said: “We have lowered our forecast for the gold price accordingly, and we are expecting sideways trading for the time being. All in all, our forecast for the second half of the year has been lowered by $50 than before (year end $2000, previously $2050).
The bank continued: “Our review indicates that we consider any further upside potential limited for the remainder of the year, which does not mean that we do not see any rally in general. We still expect the Fed to have peaked interest rates in the near future and then start Gradually preparing the market for a bearish interest rate shift. Accordingly, we are sticking with our outlook for next year, when we expect the gold price to achieve a new all-time high of around $2,100.”
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