Gold prices have been falling for three months, what next?

Gold prices have been falling for three months, what next?

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Gold prices are preparing to close with losses for the third consecutive month as central banks accelerate interest rate hikes.

Gold prices have been falling for three months, what next?

As gold prices set to close with losses for the third month in a row, they will have registered the biggest quarterly decline since the start of 2021, due to the strengthening of the dollar and the aggressive measures taken by banks. power plants against rising inflation.

Although gold was relatively calm today, the precious metal saw its worst quarterly performance since the start of 2021 in the second quarter, which covers April, May and June. The dollar’s rally against other currencies kept investors away from the precious metal this quarter.

THE LATEST SITUATION ON THE GOLD MARKET

While the price per ounce of gold on the spot market, which fell 6.2% in the second quarter on a quarterly basis, was at 1811 dollars with a loss of 0.3% today, the US gold futures fell to $1811.

Gold price for the period February-June (Once/USD)

In the afternoon, with the dollar/TL hovering around 16.65 in the domestic market, the gram of gold was at the level of 967 TL, while the quarter horse was at 1587 TL buy and 1604 TL buy, and Cumhuriyet gold was trading at 6 thousand 333 TL buy and 6,000 sell levels of 390 TL.

On the other hand, the risks posed by the war between Russia and Ukraine and central bank interest rate moves increase the risk of economic recession, maintaining demand for a safe haven for gold. Especially at the beginning of the second quarter, although the demand for refuges slightly supported the demand for gold, the aggressiveness of the central banks then reinforced the selling pressure on the yellow metal.

ADDITIONAL CENTRAL BANKS MEASURES HAVE NEGATIVELY AFFECTED

The heads of the US, UK and European central banks have also said they will continue to fight inflation, regardless of its impact on the economy. These statements by central bankers are seen as a signal that sharp interest rate hikes will continue.

Rising interest yields on central economy currencies and government bond yields also increase the opportunity cost of holding gold in an environment of rising inflation. This causes the precious metals to watch the sellers.

CONCERNS MAY INCREASE DEMAND FOR A SAFE PORT

City Index senior analyst Matt Simpson, who has done valuations on the gold market, said the decline in gold’s performance was tied to the rising dollar and interest rates, but that the yellow metal did not perform too badly against other currencies.

Experts reporting their assessments in the Traders Investment Global Markets Bulletin also said gold demand could remain strong despite the risks. In this regard, the bulletin states: “We believe that additional tightening measures by the central banks of developed countries could keep recession-related concerns on the agenda and, in this context, the demand for refuges could remain strong. In this market dynamic, it can be expected that any setbacks that may occur below the ounce will be limited as a short-term correction.

BEWARE OF THESE LEVELS UNDER OTENS

Currency strategist Ilya Spivak of DailyFX said $1780-1790 below is a critical medium-term support level, while drawing attention to central bank monetary tightening moves from Tacirler Investment.

“In terms of the short-term outlook, we will be following the 20-day average, which is in the short-term resistance position and has broken above the $1835 level as of today. If the ounce of gold manages to break above At this level, we can expect the rise to accelerate towards the $1850 level again.

However, if this level is not exceeded, we can expect to see a price action in the $1800-$1835 band in the short term. Before $1800, there are supports at $1815 and $1805, while before $1835, the $1830 level is at the resistance position.

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