Gold futures prices rebounded from a sharp fall at the start of the week on Wednesday, but Wall Street analysts remained pessimistic about the outlook for gold given the Fed's hawkish monetary policy outlook.
Gold fell to a four-month low of $1677.9 an ounce on Monday as analysts attributed the plunge to a better-than-expected jobs report in the US and a rush of investors to buy dollars, which tend to be negatively correlated with the dollar.
"the initial sell-off in gold prices on Monday may have been due to Asian markets buying dollars and selling gold in response to the strong July non-farm payrolls data reported by the US on Friday." Vivik Dahl (Vivek Dhar), a commodities analyst at the Commonwealth Bank of Australia, said on Wednesday.
Data released last week showed that US non-farm payrolls rose by 943000 in July, higher than the 845000 forecast by analysts.
Although gold has recovered some of its losses since Monday, Dhar said it was "difficult to continue to be bullish on gold" given the hawkish outlook for US monetary policy.
Dallas Fed Chairman Kaplan said Wednesday that the Fed should announce a reduction in (taper), bond purchases in September and start implementing them in October. This may be the most radical view of tightening monetary policy among Fed officials so far.
The price of gold may fall to 1600 US dollars per ounce.
Dominic Schneider (Dominic Schnider), chief investment officer for global wealth management at UBS, said on Wednesday that gold prices would fall further as the real yield on US debt was not as low as expected. He expects capital outflows from the gold ETF and gold futures markets.
"I think you will see more capital outflows. I wouldn't be surprised if at some point we see another 20 million ounces (of money) flowing out of ETF and futures markets, "Schnider said." that means there is more room for downside. We recommend that people hedge their positions strategically, or at least sell when prices rise, and make some profit taking. "
Dhar of the Commonwealth Bank of Australia wrote, "the strength of the dollar, coupled with the gradual rise in real yields on 10-year Treasuries, suggests that gold prices should tend to fall." He predicts that gold will fall to $1700 an ounce by the first quarter of 2022. Mr Schneider of UBS predicts that gold could fall to $1600 an ounce or less.
As of Thursday, U.S. gold futures were trading at $1751.10 an ounce.
