FED prioritizes job support, gold prices are boosted

FED leans towards supporting jobs, gold adds momentum

Alex Kuptsikevich - Senior Analyst at FxPro - commented that gold is still attracting new cash flow despite a slight adjustment. He said that the two main drivers of the current price increase are the change in the viewpoint of the US Federal Reserve (FED) and geopolitical factors.

jerome Powell stressed that with two-way risks, central banks cannot choose a risible path. With the choice between adequate employment support and controlling inflation, the Fed is now leaning towards the first target. Gold is a hedge against inflation, but when the Fed raises interest rates to curb prices, gold typically drops, he analyzed.

He recalled the context of 1979, when gold prices increased by 140% when interest rates decreased during the period of high inflation.

Kuptsikevich also emphasized that geopolitics are playing an important role. "Mr. Donald Trump has given up the idea of quickly ending the armed conflict in Ukraine. This pushes the world closer to a position of bilateral, promoting the process of de-dollarization and diversification of gold - foreign currency reserves, adding momentum to the increase of gold, he said.

Breakthrough despite unfavorable data

Adam Button - Head of currency strategy at Forexlive.com commented that the news flow last week was completely unfavorable for gold, but prices still increased.

"The message is: gold's rally does not necessarily require a weak USD or strong interest rate cuts from the Fed. There are those factors that are good, but gold is going up for many reasons, and eliminating one of the reasons is not enough to stop it, he stressed.

According to Button, US economic data is hot such as PCE, consumer confidence, new home sales, GDP, long-term commodity orders; USD increased by more than 1% in the week, while Nasdaq and stocks were under pressure to make a profit.

Normally, gold could fall 3% or 5% in this context, but it remains strong. Traders see gold going up while the USD is stronger and it is difficult to find an excuse not to buy, he said.

Button said that the breakthrough in gold mining stocks is also a clear signal that individual investors are getting involved.

Technical models support the increase

Michael Moor - founder of Moor Analytics predicts the highest probability scenario is that gold prices continue to increase. He cited a series of important technical milestones and recommended buying when prices broke through key levels.

Meanwhile, Kitco veteran expert Jim Wyckoff believes that the less resistant path for gold prices is still moving sideways with an upward trend. Gold prices are steadily rising in the context of maintaining a strong uptrend in terms of technology, Wyckoff said.

The above analysis shows that gold buying power is still sustainable, supported by both monetary policy and geopolitical factors. With the FED leaning towards job support, geopolitical conflicts not cooling down and individual investors participating strongly, experts say the gold outlook next week will continue to lean towards an uptrend.