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Market News The international gold price is expected to rise above 1908 US dollars

The international gold price is expected to rise above 1908 US dollars

On Thursday (May 5), international gold prices rose more than 1%, as the Federal Reserve tried to control inflation without triggering a recession, Chairman Jerome Powell ruled out the possibility of sharp interest rate hikes this year. The upper resistance of the gold price is at $1,908. Gold, also seen as an inflation hedge, has risen for a third straight session.

2022-05-05
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On Thursday (May 5), international gold prices rose more than 1%, as the Federal Reserve tried to control inflation without triggering a recession, Chairman Jerome Powell ruled out the possibility of sharp interest rate hikes this year. The upper resistance of the gold price is at $1,908.

At 14:49 GMT+8, spot gold rose 0.96% to US$1,899.14 per ounce; the main COMEX gold futures contract rose 1.61% to US$1,898.9 per ounce; the US dollar index rose 0.30% to 102.82.

The Federal Reserve announced overnight a 0.5 percentage point increase in the federal funds rate range to 0.75%-1.00%, the largest rate hike in nearly 22 years, as it seeks to tighten the extremely loose monetary policy implemented during the new crown pandemic.

Higher interest rates tend to push up bond yields, which in turn raises the opportunity cost of holding non-yielding gold, making it less attractive to investors.

But Chairman Jerome Powell explicitly ruled out a 75 basis-point rate hike at the upcoming monetary policy meeting at a subsequent press conference, pushing Treasury yields and the dollar sharply lower and supporting gold. Gold, also seen as an inflation hedge, has risen for a third straight session.

Matt Simpson, senior market analyst at trader City Index, said market participants were paring back more hawkish bets on the Federal Reserve, a catalyst for gold's gains. At the same time, inflation is likely to go higher as the Fed has not worked as hard as expected to combat it.

On the daily chart, the price of gold may start an upward ((iii)) wave trend from $1,850. On the hourly chart, the price of gold has started an upward iii-wave trend from $1,862, with the upper resistance looking at $1,907. The iii wave is the sub-wave of the upward (i) wave opened with the same sub-$1850, and the (i) wave is subordinate to the ((iii)) wave.
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