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Monday, June 06, 2022

Khaleej Times - UAE: Global recession fears could limit gold decline

Khaleej Times - UAE: Global recession fears...
Vijay Valecha, Special to Khaleej Times June 6, 2022

Gold prices will be under pressure in the coming week after a strong US job report but global recession fears will limit the decline, say commodity analysts.

The yellow metal gave up all its gains on Friday to trade near $1,850 per ounce in the immediate aftermath of the official US labour market report, which revealed 390,000 jobs being added in May, higher than expected.

“The (jobs) data fuelled the expectations of an aggressive Federal Reserve tightening outlook which buoyed the treasury yields and dollar higher and weighed on gold. However, the unemployment rate came in higher at 3.6 per cent, above the expected rate of 3.5 per cent… As investors digest the information, it is likely to tame down the aggressive rate hike expectations, which should support the metal. Meanwhile, rate hike fears are being countered by recession fears limiting the metal's downside,” said Vijay Valecha, chief investment officer at Century Financial.

Technically, he said, the metal is trading in a range of $1,830-$1,875, and only a break on either side will determine the next direction. Below $1,830, the next support is seen near $1,810.

Globally, economists fear that some countries could slip into recession, especially after the outbreak of the Ukraine crisis. The International Monetary Fund chief Kristalina Georgieva is worried those countries that have been weakened by the Covid-19 pandemic could slip into recession as they rely on imports from Russia for oil and food.

Rashad Hajiyev, founder of RM Capital Consulting, said gold will reverse and trade back in the coming days after dropping below $1,860 per ounce.

In the UAE, the Dubai Gold and Jewellery Group data showed 24K closing the week at Dh224.25 per gram, 22K at Dh210.5, 21K at Dh201.0 and 18K at Dh172.25.

In the week ahead, Valecha sees 24K gold price will likely trade between Dh219 and Dh230.

Source:
Khaleej Times
Zawya