Gold, a precious metal, is officially in a bear market and could remain price suppressed in the coming weeks, according to market analysts. Moreover, amid the gloomy macroeconomic backdrop, gold, a popular safe-haven asset, has lost 17.50% of its value against the US dollar over the past four months.
Market analysts at TD Securities say a Fed hike could depress gold prices.
The cryptocurrency economy is undoubtedly experiencing a bearish downturn as some of the top digital currencies have lost 65% to 90% of their value. Gold, a well-known safe-haven asset, is also dealing with a downturn since the precious metal hit an all-time high (ATH) of $2074.60 for an ounce of pure gold on March 8, 2022. Gold is currently trading at$1,711 per ounce. Gold is currently trading at $1,711per ounce. This asset has lost 17.50% in 134 days.
According to Kitco’s Neils Christensen on July 18, TD Securities analystssaidthat gold has pressure to deal with in the coming weeks.” Market analysts at TD Securities wrote, “With nominal policy rates jumping higher, inflation expectations eroding along with pending economic weakness, and real rates on the short end of the curve continuing to rise and making it very clear that there is little chance of an uptick, investors have very significantly netted 6% of open interest (3 million ounces) and reduced,” he wrote.
Canadian investment banks and financial service providers added
With continued Fed hikes and declining economic activity, gold lengths will continue to erode and prices will likely remain under pressure in the coming weeks.
Called a bear market right after the gold top, Ukraine sells billions of gold
TD Securities analysts as well as Dominic Frisby, the main commentator on gold, commodities, currencies, and cryptocurrencies at moneyweek.com, have said that gold is in a bear market on March 31, 2021.” It is a bear market,” Frisby wrote at the time.” In a bear market you get tradable gains, but a bear market is a bear market. A bear market can last longer than you think. Sometimes they don’t ‘make sense. But they don’t last forever.”
On Monday, Kitco’s Christensen further explained that “for the first time since May 2019, speculative positioning in gold turned 6,133 net short.” Commodity analysts at Societe Generale also stated that “the gold market has clearly turned bearish.” Additionally,thepress noted that Ukraine has sold billions in gold reserves since the war with Russia began. Katerina Rozhikova, deputy governor of the National Bank of Ukraine (UNB), told the press that $12 billion in gold has been sold to bolster the country’s supply.
“We are selling [this gold] so that importers can buy the goods they need for the country,” Rozhkova elaborated in a July 17 statement.
TD Securities Market Strategist: “Gold will start feeling the pain under a hawkish Fed regime”
In addition, at the end of June, the U.S. and the Group of Seven Leadersimposed sanctions on new Russian gold importsin an attempt to hit Vladimir Putin; according to an investor noteby a TD Securities analyst, a hawkish Federal Reserve would spell doom for the value of gold. Under these circumstances, “gold bullion has fallen like dominoes, tearing through various support levels on its way to a price of $1600/oz.” Explaining that “prices are now challenging pre-pandemic levels and gold’s largest speculative group will begin to feel the pain under a hawkish Fed administration as their entry levels are tested.
Regarding leveraged gold positions, market strategists at TD Securities believe that “these large positions are the most vulnerable, suggesting that the yellow metal is still susceptible to further downside.” Meanwhile, as gold has fallen sharply, the price of silver per ounce has also followed the yellow metal’s decline, with the 59} silver pricefalling below $20 per ounce for the first time in two years. Coincidentally, as August approaches, the value of gold is approaching the price lows it hit below the $1700 handle in August 2021.
What do you think about analysts saying that gold is in a bear market? Do you expect gold to sink below its current value? Let us know what you think about this subject in the comments section below.
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