gold outlook Gold price 'vulnerable' to major move lower, says ANZ
Gold is in a precarious position as a break below $1,675 an ounce could open the door to $1,600 an ounce, warned Australia and New Zealand Banking Group .
"The Federal Reserve made it clear that it is leaning toward doing too much tightening rather than too little. With inflation stubbornly high, interest rate hikes will be aggressive. This will also lead to further U.S. dollar strength, aided by weakness in the EUR as economic conditions worsen," ANZ's senior commodity strategist Daniel Hynes and commodity strategist Soni Kumari said in the latest report this week."Deteriorating liquidity and higher U.S.
"The risk of either stagflation or outright recession could ultimately turn this around," Hynes and Kumari said."The rising risk of a protracted recession could revive haven demand. If the Fed turns dovish and inflation remains high, this could keep real rates low and supportive for gold prices." The short-term technical picture remains bearish for gold, according to ANZ."The break below USD1,675/oz suggests the price could fall to USD1,600/oz," the strategists wrote."Bears could extend downside price moves to USD1,600/oz and below … Immediate resistance lies at USD1,700/oz, and a break of this level would put the next resistance point at USD1,735/oz. While reversal of the trend could be possible if prices break critical level of USD1,800/oz.