World Gold Prices Are Predicted To Weaken, This Is Analyst's Explanation

Illustration (Photo: Doc. Antara)

JAKARTA - Director of PT Laba Forexindo Berjangka Ibrahim Assuaibi predicts that the price of gold will weaken by 1,922.10 US dollars to 1, 978.10 per troyounce in today's trading.

Meanwhile, Ibrahim said, the world gold price was at the level of 1.951.50 US dollars per troyounce on Tuesday night.

Gold prices weakened at the start of Asian trade on Tuesday after touching the highest level in the previous session as markets locked some of the profits ahead of the upcoming Federal Reserve's interest rate decision, he said in an official statement, Wednesday, March 22.

Meanwhile, continued Ibrahim, caution over the potential for a banking crisis has made safe haven demand strong.

Ibrahim also explained that the sharp yellow metal rally over the past week was due to growing concerns about the collapse of US and European banking driving a swift flow into traditional safe haven assets.

"While betting that the Fed will lack the economic head's space to continue raising interest rates is damaging to the dollar," he explained.

On Monday, March 20, Ibrahim said, the price of gold passed the level of $ 2,000 per ounce for the first time in a year. Although for a moment, caution also comes ahead of what is expected to be an important Fed meeting on Wednesday.

"The strengthening of gold is only temporary because bank bankruptcy in the US and in Europe and large funds already get the desired profit, namely the price of 2000 US dollars per troyounce. And gold is ready to fall towards USD 1.850 in a short time," said Ibrahim.

As for the results of the two-day meeting of the Fed on Wednesday, with banks broadly expected to raise interest rates by 25 basis points (bps), the figure is smaller than the expectations of an increase of 50 bps previously.

Ibrahim said, the perception was in line with the growing bank crisis, making the market mostly reassess their expectations whether the central bank would tighten further policies, given the sharp increase in interest rates putting a lot of pressure on the banking system.

"Gold and other precious metals benefit from the less hawkish Fed, given the increase in interest rates boosting the cost of chances to hold assets that don't provide returns," he explained.

Ibrahim also said uncertainty over the Fed has also weighed on the dollar over the past week, increasingly benefiting metal prices, while the Fed launched emergency liquidity measures for the banking sector, weakening some of its monetary tightening over the past year.

"But given that US inflation still tends to be well above the Fed's target range, banks may raise interest rates further," he said.

Meanwhile, said Ibrahim, other precious metals were damped on Tuesday, but were still rising strongly over the past few sessions.

Platinum futures fell 0.1 percent to 996.55 US dollars per ounce, while silver futures rose 0.1 percent to 22.665 US dollars per ounce.

Among industrial metals, copper prices are trading sideways after rising during the last five sessions.

But they are still trading at relatively low levels, after being hit by concerns over the slowdown in economic growth.

Copper futures rose 0.1 percent to 3.9610 US dollars per pound.