Gold Price Forecast: XAUUSD to remain under pressure on expectations of 75 bps by the Fed – ANZ
15.07.2022, 06:49

Gold Price Forecast: XAUUSD to remain under pressure on expectations of 75 bps by the Fed – ANZ

What are key drivers for gold prices? Aggressive monetary policy tightening and a stronger US dollar will keep the yellow metal under pressure. On the other hand, increasing recession fears in developed markets and geopolitical risk could provide support to gold’s haven demand, economists at ANZ Bank report.

Bearish sentiment dominates

“US inflation hit a 41-year high of 9.1% in June, but gold’s status as a hedge against inflation was not enough to offset concerns of faster monetary tightening by central banks. If the Fed raises rates by 75 bps in the next two meetings, interest rates would rise to 2.25% by the end of July and 3% by end of September. Such a steep trajectory will be bearish for gold prices. This bearishness could be offset by the weakening economic outlook.” 

“The inversion of the 2s/10syield curve has deepened, which would usually indicate impending recession. Rising geopolitical risks and an equity market sell-off could also provide support.” 

“The US dollar is also likely to lose steam towards the end of the year, providing some tailwind for gold.” 

“We expect the gold price to find a floor near $1,700.”

 

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