Strategists at TD Securities say gold could sell off again if geopolitical tensions continue to ease and the Fed starts to raise interest rates. The key level worth watching is $1914 an ounce.
A fall below $1914 an ounce would trigger a massive sell-off, the strategists said. Gold prices may be particularly vulnerable to the Fed's more hawkish influence and deeper consolidation.
Edward Moya, a senior market analyst at OANDA, said gold could rise back to $2000 if the war in Ukraine continues to dampen sentiment. The war in Ukraine is unlikely to ease immediately, which should provide fundamental support for gold prices. If the FOMC's decision shows that some policy commissioners have curbed the momentum of interest rate hikes on the dot chart, then gold prices could return to their best and climb towards the $2000 level. "
MKS PAMP has just raised its forecast for gold prices, which are expected to average $2000 this year, citing a change in its macroeconomic assumptions.
Nicky Shiels, head of metals strategy at MKS PAMP, said: "We initially thought that the background of stagflation would support gold (due to COVID-19, some zero novel coronavirus policies, supply chain risk, etc.).
This background is accelerating, the risk of hyperinflation and depression in Russia is increasing, and the region / Europe is in recession. Structural and ongoing institutional changes-from globalism to isolationism and related inward-looking trade policies-were exacerbated by the war and led to inflation. Another worrying trend is that global monetary and payment systems and wealth are now politicized and weaponized. "
