Gold Price Forecast: XAU/USD to rally strongly in the second half of the year on Fed pause — ANZ

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The Fed’s terminal rate repricing will boost the price of gold in the near term. ANZ Bank economists they expect the Fed to stop its cycle of interest rate hikes this year. This should push the USD down while leaving US real yields intact, which should lift XAU/USD in the second half of 2023.

The weakening of the dollar will be a key factor for gold prices

“Improving fundamentals in other major economies could limit the dollar’s rise. Our forecasts for the DXY remain unchanged, pointing to a drop in the index to 98 by the end of the year. This will be a tailwind for the gold market.” Gold”.

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“We believe that the recalibration of the markets’ expectations around the FFR could maintain the volatility of gold prices in the near term. However, we continue to expect the Fed to pause and yields to trend lower. towards the end of the year, which should support gold prices in the second half of 2023.”

“We see last year’s monetary tightening beginning to manifest in a slowdown in economic growth later this year. This could have a double impact: slowing economic growth could trigger monetary policy easing, and gold could attract refuge flows.”

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Source: Fx Street

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