- Rising market volatility could weigh on gold prices as the market remains in an uptrend, but mixed sentiment shows it's not ready to make sustainable record highs just yet.
Wednesday, after raising interest rates by 25 basis points, the Federal Reserve shifted its monetary policy into a more neutral stance; at the same time, markets started pricing in the potential for a rate cut as early as July. "I do think gold can and will eventually produce a sustained break above $2,000, but I'm still unconvinced that we're in a position where that can happen right now," said James Stanley, senior market strategist at Forex.com."The factor that ultimately propels gold beyond $2k in a sustainable way is the Fed pivoting not only into a pause but possible cuts or perhaps even QE. And I think the probability of that, when Core CPI is over 5% and the unemployment rate is at 3.
"I'm not too concerned on days like this. I see this volatility as noise. But this is the time to buy because the long-term trend is higher," he said. Some analysts noted that Friday's selloff and its ability to hold support at $2,000 an ounce could attract investors next week. "We've seen this Congressional kabuki dance before - the 2011 U.S. debt crisis drove gold prices to a new record," he said."Congress must raise or suspend the debt limit to avoid market calamity, but both sides of the debate remain intransigent. If cooler heads prevail and a default is avoided, gold prices could quickly fall back to earth. In the meantime, I standby last week's prediction that gold could reach or possibly surpass $2,450 in the coming weeks.