(Click here for an interactive chart of gold prices)
“The fact that the Fed was optimistic about the economic recovery means that gold will find it difficult to break higher immediately. In the US, the economic momentum has also meant that yields have an upward bias, which will keep gold capped,” Harshal Barot, a senior research consultant for South Asia at Metals Focus, told Reuters.
Gold prices closed higher on Wednesday after the Fed decided to keep interest rates low and said it was too early to consider rolling back its emergency support. The dollar declined following Fed chair Jerome Powell’s speech but recovered the next day.
“The gold market lacks confidence. Having reached $1,790 overnight and once again failed to challenge $1,800, the conviction among traders remains low,” said Saxo Bank analyst Ole Hansen.
“The market keeps a close eye on correlation to other markets and with a slightly stronger dollar and real yields moving higher, profit-taking and selling emerged.”
In a Reuters poll earlier this week, analysts and traders slashed their gold price forecasts, with many believing a return to last year’s record highs is unlikely as economic recovery tarnishes the safe-haven metal’s appeal.
The poll, featuring 42 analysts and traders, returned a median forecast for gold of $1,784/oz for 2021 and $1,743/oz for 2022 — sharp downgrades from projections of $1,925/oz and $1,908/oz respectively in a similar poll three months ago.
(With files from Reuters)
