Cairo 12/2/2023
The General Division of Gold and Jewelry headed by Eng. Hani Milad Gayed at the General Federation of Chambers of Commerce issued its weekly report on global market movement and analysis of indicators of future price changes, which indicated the continued decline in the global price of gold for the second week in a row, while attention is drawn to the US inflation report, which is scheduled to be issued next week. Where analysts expect it may be the next catalyst for the prices of the precious metal.
After the rise that gold achieved during last January, which reached $1,975 an ounce, gold futures contracts for April are trading at $1870.70 an ounce. Down by 5.3%. As for the immediate purchase price, it reached 1867 dollars an ounce during the middle of today’s trading.
Prices began to decline after the employment report in the United States last week showed an increase in jobs at 517,000 in January, and this was followed by Federal Reserve Chairman Jerome Powell confirming market fears that if inflation rates continue and their negative impact on the American economy, the central bank will be forced to continue raising interest rates. higher than expected, This was confirmed by Powell during his attendance at the Economic Club in Washington last Tuesday, noting that the “inflation reduction process” has begun to decline, but it has not reached the safe limits that the US Federal Reserve aspires to, which gives the impression that the US Federal Reserve will not tolerate its strict policy towards raising interest rates. Until it reaches the peak that may threaten the American economy.
Quiet week and upcoming events:
Experts expect a quiet week without violent changes in gold prices, but the beginning of the week may constitute a milestone in prices. It is expected during the current week that a group of indicators will appear, on top of which is the inflation index report in the US markets, which will form the next direction of the Federal Reserve, which will affect the movement of prices of the precious metal in global stock exchanges. .
Expectations indicate a decline in annual inflation, which reached 6.2% last January, compared to 6.5% in December, which may ease the Fed’s fears and calm the escalation of interest rates, which directly affect prices.
The market is waiting for another indicator that is no less important than the US Federal policy to determine the new price that global markets may witness. According to the latest reports of the World Gold Council – central banks in many countries of the world have been active in raising their reserves of gold, which caused support for buying gold and raising its prices during last January. For example, the US Central Bank bought 1136 tons of gold, reaching record rates.
The markets are also waiting to see if this trend will continue, given its importance in determining the volume of global demand, as the continuation of this trend will contribute to gold staying above $1,800.
The markets are also waiting for whether Russia will offer more of its gold reserves for sale to fill the budget deficit it is facing due to the decline in its revenues from the sale of gas and the increase in its expenditures to cover the costs of the war in Ukraine.
It is also expected that the retail movement report will be issued, which is expected to include an increase in the retail trade movement due to the mild weather in the United States during the second half of last January, compared to the previous month, which witnessed a significant drop in temperatures – which confirms the high consumption movement and an increase in spending. The increase in car sales, which was strong in the US markets, is a general indication of a significant increase in retail sales.
At the moment, the potential trading range of gold is very wide. With strong support currently at $1,800 an ounce and resistance at $1,900.
The main indicators expected next week:
Tuesday: US consumer price index
Wednesday: US retail sales report, producer price index, and industrial production
