Gold hammered, analysts warn of capitulation event if price drops below pre-pandemic levels kitconews gold silver mining economics metals finance investing
The gold market tumbled $40 Thursday and briefly fell below the $1,700 an ounce level as markets began to price in an oversized 100-basis-point rate hike from the Federal Reserve at the July meeting.
"Only yesterday morning, the market had just finally priced in a full 75bp rate hike in July for the first time. In a few hours, an above-consensus U.S. CPI reading and a surprise 100bp rate hike by the Bank of Canada changed the whole picture again. After these two events, markets have moved to seriously consider a 1.0% rate increase by the Fed in two weeks," said Francesco Pesole, FX strategist at ING.
"A major capitulation event may be unfolding in gold," said Daniel Ghali, senior commodity strategist at TD Securities."Gold bugs are falling like dominoes. With prices challenging pre-pandemic levels, risks of a significant capitulation event in precious metals are growing.""The yellow metal is feeling the heat from the inflation data and aggressive tightening in response.
"Volatility around EUR/USD parity should continue to be elevated and to impact other USD crosses. We think that the current re-pricing higher in Fed rate expectations can – along with other factors – keep the dollar supported at this stage, and the risk of a more decisive break below 1.000 in EUR/USD can strengthen the greenback across the board," Pesole added.
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