Gold price edges higher amid heavy USD selling in Japan
NEW YORK (April 29) The Gold price (XAU/USD) edges higher on Monday, trading at $2,338 an ounce, on the back of a weaker US Dollar (USD) – the currency in which Gold is mostly quoted and traded in.
The USD depreciates after heavy selling pressure, purportedly although still unconfirmed by the Japanese authorities, who are selling USD to buy the Japanese Yen (JPY) in order to prop up their currency.
Gold price comes off highs on interest rate outlook
The Gold price is trading sideways after a backslide from record highs of $2,430 in mid-April, when it became apparent interest rates would remain higher for longer in the United States. This made non-yielding Gold less attractive because investors could earn relatively more by staying in cash.
Persistently high inflation in the US caused the recalibration of the outlook for interest rates. From the US Federal Reserve (Fed) – the body tasked with setting interest rates in America – foreseeing the need for three 0.25% interest-rate cuts in 2024, markets now expect only one and a half 0.25% cuts, due to persistently high inflation.
More light will be shed on the outlook for interest rates when the Fed meets to decide its monetary policy on Wednesday, in the meantime Gold price may remain relatively subdued.
Gold price may drift lower in the short-term but will eventually recover – TD Securities
Gold price is likely to drift lower in the short-term if economic data stays firm and inflation persists but this is unlikely to last into the autumn, according to analysts at investment bank TD Securities.
“..once we start seeing disappointment or negative data surprises, investors may start getting interested again into the autumn,” says Bart Melek, Head of Commodity Strategy at TD Securities.
“Once Western demand is combined with China uptake, it is quite likely that the yellow metal will move above recent record levels. Under this scenario, $2,500+ target would be reasonable,” adds Melek.
FXStreet
