Gold futures continue a bearish trend that began after the 20202 highs. Will it rise again soon or is it destined to fall?
The percentage of investors who view gold as an attractive investment vehicle is steadily increasing. During 2023, a significant increase in interest was observed, evidenced by data from various statistical sources. This growth can be attributed to heightened concerns about a possible economic recession and the heated media debate regarding the inflation increase.
During the first half of the year, investors in the precious metals sector enjoyed lucrative returns, which stood at around 8%. However, the landscape seems to have changed in the second half of the year and the trend of gold futures showed a reduction.
Therefore, in a context of constant economic uncertainty, does it make sense to expect a continuation toward new highs for the gold price?
What’s been driving the price of gold down?
It seems that fears of a banking crisis and the possible intensification of global economic challenges, following a likely excessive increase in interest rates by central banks, have made investing in gold particularly attractive in the first half of the year. According to a survey conducted by SPDR in June, 20% of US investors currently include gold in their portfolio strategies, and this percentage looks set to grow further.
The market phase that characterized the first half, during which the Fed Watch Tool suggested probable increases in interest rates, favored the positive trend of gold. However, considering that many market players now expect at least a break in the rate-hiking cycle, gold’s investment appeal could contract versus government bonds, negatively impacting demand for precious metals.
In summary, with a virtually stable dollar with a Dollar Index (DXY) above the 100 mark, and as the likelihood of a pause in the Federal Reserve’s series of rate hikes increases, the growth potential of the gold price is significantly limited.
Gold: a look at the graph
Despite traders’ current bias towards a sideways down trend for gold, some traders agree that current economic risks could boost demand for gold. All the more so with an increase in expectations linked to a reduction in the interest rate in the United States, with a consequent negative impact on the Dollar Index (DXY).
From a technical point of view, the price of gold is currently undergoing a particularly significant pull-back phase, hovering around the $1,900 threshold. It will be interesting to monitor whether supply will continue to outweigh demand or whether the buyers will manage to push the price beyond the former support level.
- Gold 1D
Original article published on Money.it Italy 2023-08-23 12:30:50. Original title: Oro ancora in ribasso: a quando un’inversione di prezzo?
