Gold price forecast changes added to pressure on bullion this week, as the metal fell to $4,150 and came close to testing $4,000 again.
Gold had started the week with a sharp rise. Earlier, the end of the Iran war helped extend a rally that began late last week. That move lifted gold from $4,022 to as high as $4,382.
However, the rally lost force just before the FOMC decision. The statement struck a hawkish tone. In addition, new Chairman Kevin Warsh repeated that policymakers were determined to reach the 2% inflation target. He stayed vague on details, though, and that left the equity market questioning whether higher interest rates are actually coming.
Gold Price Forecast Adds Pressure
Goldman Sachs analysts also lowered their gold price forecast. They cut their year-end target to $4,900 per ounce from $5,400. The bank said its long-term view stayed constructive, but it turned cautious in the near term.
The analysts said, “Our gold price views remain structurally constructive but tactically cautious, with near-term downside risk and medium-term upside risk.” Even so, the lower target added to a weak tone in the market.
Gold was down $58 on the day at $4,150. It also touched a session low of $4,121. As a result, the market moved close to a retest of $4,000, a level the source described as carrying breakdown risk.
Oil Drop Eases One Gold Risk
The source said momentum now points lower for gold. It also said the broader backdrop has not helped, because gold has failed to rally on a more positive risk tone since April.
Still, one pressure point may have eased. The source said the Iran war may now be over, while oil prices have fallen to $76.85. During the conflict, higher oil prices raised concern about emerging market current accounts.
Turkey sold $120 billion in gold early in the conflict as oil prices jumped. That sale fueled fears that more official selling could follow. Now, with oil lower, the source said those risks look minimal. Meanwhile, reserve managers may look to rebuild stockpiles at what the source called a relatively attractive price.
You can access our other news on natural gas markets and global market developments here.
