Bad News for Gold Investors: Giant Bank Predicts the Exact Level Prices Will Drop To
The downward trend in gold continues. With the expectations of a rate hike by the Federal Reserve (FED) remaining strong, the pressure on gold ounce has intensified, causing it to plummet to its lowest level in the last 2.5 months, at $4,175. Following this sharp decline, major financial institutions and commodity strategists worldwide have begun to revise their forecasts for the future of the gold market. A major bank has now issued a new prediction for gold.
Why did gold prices drop?
Saxo Bank's Commodity Strategist, Ole Hansen, drew attention to the weakening connection between gold prices and oil prices in recent times. Pointing out a shift in the main driving force in the markets, Hansen emphasized that the focus has moved from sudden inflation concerns due to energy sources to US monetary policy, rising bond yields, and a strong dollar index.
Hansen stated, 'This indicates that the market's focus is gradually shifting away from the sudden inflation impulse driven by energy sources, moving towards expectations of US monetary policy, high bond yields, and the dollar. As long as inflation concerns keep treasury bond yields high and support the dollar, it is likely that the yellow metal will remain vulnerable.'
"The next technical support level is hovering around approximately $4,100."
Analysts have highlighted that fund outflows continued into June, drawing attention to technical levels. Suki Cooper, Head of Commodity Research at Standard Chartered Bank, warned that if investors begin to liquidate their loss-bearing positions in gold-backed funds, the selling pressure could intensify further. Cooper stated that at least 270 tons of gold purchased at the level of $4,250 is currently in the loss zone, adding, 'The next technical support level is around $4,100.'
Citigroup also revised its stance on the hemorrhage in gold. The bank's commodity research team lowered its gold price target for the upcoming three-month period from $4,300 per ounce to $4,000. Citigroup analysts pointed to the slowdown in central banks' physical gold purchases and the stagnation of ETF inflows, indicating that the upward momentum has faded. Echoing a similar warning, US-based research firm Yardeni Research underscored that the pullback in gold ounces could continue down to the $4,000 threshold.
(The statements in the content are not investment advice.)
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