24K99 News The gold market was under solid selling pressure after failing to stabilize the key support of $2,400 per ounce. Although the market has room to fall in the summer, a market analyst said that precious metals are still in a solid position and are expected to rebound before the end of the year. #黄金技术分析 #
In an interview with Kitco News, Chantell Schieven, head of research at Capitalight Research, said that not only is gold technically overbought, but it has also begun to enter a period of seasonal weakness in its history. In this environment, Schieven indicated that she saw the price of gold fall back to $2,150 per ounce, which was the breakthrough level in March.
Although Schieven expects a pullback in gold over the next few months, she is still a long-term bully. She said she would raise her gold price target at the end of the year to 2,500 US dollars per ounce instead of 2,400 US dollars per ounce.
The comments came when June gold futures opened with a drop of more than 2% on Monday and ended at $2349.10 an ounce.
At the beginning of this year, Schieven was one of the most bullish analysts participating in the London Bullion Association's annual price forecast.
“It's a bit surprising to see gold break through all of these levels. Although I think it will go higher, I think we need to see some correction,” she said. “I don't think gold will completely fall below $2,000, but we may see $2,100 before the summer ends.”
Schieven said that the main reason for her recent cautious attitude towards gold is a shift in interest rate expectations, which support higher bond yields and a stronger dollar. The market is now delaying the Fed's easing cycle until after the summer.
According to the Chicago Mercantile Exchange federal funds rate monitoring tool, the market believes that the possibility of interest rate cuts in June is less than 20%. Meanwhile, the possibility of interest rate cuts in July has dropped below 50%.
“Gold has moved away from some of its basic drivers, and I think we're starting to see a refocus on these drivers, which may be negative for gold.” she said.
However, Schieven added that the gold market has become more delicate than just following bond yields and the dollar. Although the Federal Reserve is not expected to cut interest rates in the summer, it is unlikely to raise interest rates.
“The Federal Reserve will eventually cut interest rates this year. I expect they will cut interest rates after the 2024 election, when we will see the price of gold climb to around $2,500 per ounce. The summer low may prove to be a good time for long-term investors to buy.”
Meanwhile, Schieven said she expects inflation to play a more important role in gold price trends. She pointed out that as the Federal Reserve sticks to its monetary policy, higher interest rates mean that real interest rates will rise, reducing the opportunity cost of gold as a non-profitable asset.
“Ultimately, even when they insist on hawkish comments, the Federal Reserve will still leave room for itself to cut interest rates,” she said. “They will lower interest rates even if inflation continues above the 2% target. Due to rising debt, the Federal Reserve is unable to maintain high interest rates.”
In this highly volatile year, Schieven said that gold is still in a long-term upward trend. She pointed out that in the 70s of the last century, high inflation rates, economic uncertainty, and geopolitical turmoil led to a doubling of the price of gold.
While this might be unlikely to happen today, Schieven said it's not impossible.
“We don't think it's excessive to seek a gold price above $3,300 per ounce over the next 5-6 years,” Schieven wrote in a recent report.