weekahead gold Should gold investors be selling into the rally? Analysts weigh in on the $50 move
Gold prices surged nearly $50 on Friday as the latest U.S. jobs report clarified some of the Federal Reserve's mixed messages, and China signaled a possible easing of its Covid-Zero policy. But caution is still advised as all previous quick rallies have been used as selling opportunities.
On the dovish end of things, Powell said that the U.S. central bank is now paying close attention to"the cumulative tightening" and potential"lags" with which monetary policy affects inflation and economic activity. "This report shows that the labor market is cooling, and that is good news. Gold is surging as the dollar is having its worst day since March 2020," OANDA senior market analyst Edward Moya told Kitco News."The market now believes that the Fed has got a good handle on things and could go at a slower pace."
"The market is thinking that the economy is slowing down, and that is reflected in the yield curve here, with the 2-year and the 10-year," TD Securities global head of commodity markets strategy Bart Melek told Kitco News. TD Securities is projecting for gold to fall below $1,600 in the next few months as it sees the federal funds rate peaking at 5.5% instead of the previous projections of below 5%."As the economy slows, you will start seeing real rates jump. And central banks won't be buying as much gold as they did this last quarter. The cost of carrying will be expensive," Melek added.
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