Started by PocketOption, Jun 05, 2023, 09:08 am
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Gold and silver prices are set for their largest weekly gain in nearly two months as optimism grows over a potential pause in the Federal Reserve’s tightening campaign. Bullion’s appeal is being bolstered by a softer dollar and expectations that the Fed will keep interest rates unchanged in June. Spot gold edged 0.1% higher to reach $1,980.49 per ounce, while US gold/silver ratio futures remained steady at $1,997.50. With a 1.7% increase so far this week, gold is on track for its best performance since early April.
Market sentiment in the gold sector remains positive, with analysts predicting further upward movement in prices. Edward Meir, a metals analyst at Marex, suggests that gold could see additional gains as the Fed will maintain a hold in June. Philadelphia Fed President Patrick Harker’s recent statement advocating against a rate hike, despite inflation levels coming down slowly, supports the expectation of unchanged rates. Currently, markets are pricing in a 71.5% chance of no rate change in June, further boosting gold’s allure given its lack of yield during periods of rising interest rates.
The decline in the dollar index to a one-week low has made gold more affordable for buyers holding other currencies, contributing to its upward momentum. Additionally, the passage of bipartisan legislation by the US Senate, lifting the government’s debt ceiling, has averted the potential risk of a historic default.
Investors are closely watching the US Labor Department’s non-farm payrolls (NFP) report. Its results could impact market sentiment and influence the Federal Open Market Committee’s (FOMC) decisions. Tim Waterer, the chief market analyst at KCM Trade, suggests that a strong labor market print could lead to a dollar rebound, which may dampen gold’s performance.
At this point, XAG/USD price might surpass the immediate 50-EMA hurdle at approximately $23.95. Therefore, it could target the $24.00 level and potentially aim for the $24.55-65 zone. Interestingly, up to this day, it has served as a significant barrier since early January. A breakthrough beyond this zone might open doors for further gains, with the $25.00 round figure and the yearly high near $26.15 becoming attractive targets for silver buyers.
However, a downside scenario could see silver finding support at the resistance-turned-support confluence around $23.50. In such a case, the 200-EMA level of around $22.85 and the previous monthly low of $22.68 are likely to be key levels to watch.
In summary, the gold/silver ratio is benefiting from the expectation that the Federal Reserve will pause its interest rate hikes at the upcoming June FOMC meeting. With a softer dollar and the likelihood of unchanged rates, 9ct gold price per gram has experienced its strongest weekly gain since April. Silver news, too, has witnessed positive momentum, breaking through resistance levels and showing signs of further advancement. The market’s focus now shifts to the US jobs report, which could shape future market sentiment and impact precious metals’ performance.
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