SMM News: the gold market continues to consolidate, and the rebound of the US dollar makes the gold price rise and fall.
(Commerzbank), a German commercial bank, believes that gold investors need to keep a close eye on the money market, especially the euro / dollar.
"the euro and the dollar are approaching the 1.20 mark, and if you break through that level, then the gold price can break through the $2000 / oz mark."
The bank pointed out that the challenge of the Fed's inflation target will provide long-term support for gold prices, as gold is seen as a hedge against risk.
"the Fed will maintain extremely loose monetary policy for a long time, but there may be new bubbles in the financial markets."
However, the bank points out that if the dollar is stable, it will be difficult for gold prices to rise further.
William De Vijlder, chief economist of the (BNP Paribas) of the Bank of France and Pakistan, said that the Fed's attitude towards inflation will bring great volatility to the market.
De Vijlder points out that over time, the Fed's 2 per cent average inflation target will become difficult to really define, meaning higher market volatility.
"long-term low interest rates mean higher asset prices and a more sensitive and volatile market once tightening comes."
De Vijlder believes that in this case, the Fed's response mechanism will become more difficult to interpret, such as when to reach the inflation target that can be tightened.
"this ambiguity can lead to greater volatility."
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