Gold price at risk of falling to $1,700 unless Fed cuts rates - Metals Focus gold Fed
Gold is unlikely to hold the $2,000 an ounce level in the long term unless the Federal Reserve communicates a clear pivot in its messaging, said Philip Newman, managing director at Metals Focus.
With the market pricing in rate cuts later this year, gold benefits from the dollar-negative connotations and the reduced opportunity cost of holding the precious metal."Right now, we see more investors going long in gold and some short covering. Those together pushed gold above $2,000," Newman described.
This is why Newman believes that gold won't be trading above $2,000 an ounce for much longer."We see the Fed raising rates again and then holding rates high for long enough that we witness heavy liquidations emerge in the gold market, sending the price lower," he said. Once the selloff kicks off, gold's price floor could end up being down at $1,700s. But if gold can hold above $1,900 for longer, it could limit the selling."That may mean that the gold price falls less. But we still think the price will weaken considerably," Newman added."Could you see it falling into the $1,700s? That is possible."
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