Gold Silver Reports (GSR) – Gold Price Prediction, Correction Dependent on Risk Recovery : Trade developments, risk appetite and position adjustment are liable to dominate the gold price discussion during the week ahead, with the U.S. interest rate debate on hold for the very short term. Gold moved lower during the first half of the past week before reversing and posting significant net gains – with five-week highs near $1,350 per ounce – under the influence of a sharp deterioration in risk appetite.
Gold Price Prediction
U.S. data releases are unlikely to have a major impact during the coming week, with expectations of another very robust reading for Tuesday’s consumer confidence release. The most important releases will be on Thursday, with the latest jobless claims and Chicago PMI data giving fresh insight on underlying trends. The core PCE prices index will also be watched closely given the ongoing focus on inflation trends. The data have been in line with consensus expectations over the past few months, limiting the impact, but an erratic reading would trigger a jolt to markets.
Commentary from Fed officials will also be monitored closely during the week ahead. Although the Federal Reserve Open Market Committee (FOMC) raised forecasts for the Fed Funds rate, the overall stance was not considered hawkish relative to expectations. Any attempt to push back against the market interpretation would be a significant market factor. Firm data and hawkish Fed rhetoric would tend to underpin the dollar.
Developments surrounding risk appetite will be extremely important during the week after trade fears triggered a sharp deterioration in risk appetite and heavy losses for equity markets. Concerns surrounding steel tariffs eased slightly as the EU and South Korea were also granted short-term exemptions. Attention has switched to U.S.-China relations following the U.S. move to impose $50 billion of import tariffs due to allegations of intellectual property theft. China has warned over retaliation, although measures announced so far have been restrained.
Therefore, the main focus will be on the risk of retaliation and a spiraling conflict. If China maintains a relatively diplomatic and measured tone and looks to take a longer-term view, market concerns could fade to some extent, which would also stifle gold demand. In contrast, an aggressive tone from China would tend to reinforce market fears and support precious metals.
An important related area will be wider rhetoric from the U.S. administration, especially given ongoing personnel changes. Hawkish rhetoric on Iran as well as tough talk on trade would tend to underpin gold, although Trump will also be under pressure to take a more restrained tone, especially given ongoing damage to U.S. equities.
Read More: Global Gold Prices Shine as Trade War Fears Rattle Markets
Position adjustment and window dressing will be an important factor across asset classes and will inevitably have a significant impact on gold prices, especially late in the week. The closing of the first quarter will coincide with Easter holidays, which will undermine liquidity in both European and North American markets. These factors will increase the potential for choppy trading conditions, with markets also wary over year-end Japanese capital repatriation. – Neal Bhai Reports (NBR) INDIA
