07.07.202112:53 Forex Analysis & Reviews: Gold jumped to 3-week high, but experts do not see its growth potential

On Tuesday, the quotes rose by 0.6%, or $10.90. As a result, the value of gold bars on the New York Comex Exchange was $1,794.20. According to the FactSet resource, this is the highest value in almost 3 weeks.

Analysts believe that reports that consumer demand for the asset is gaining momentum, especially among central banks, helped gold to return to a 3-week high.

According to a study conducted by the World Gold Council, about one in five central banks in the world intends to increase their gold reserves during 2022, writes Bloomberg.

Also, the price of the yellow metal continues to be pushed up by the decline in the yield of 10-year US bonds. On Tuesday, the indicator fell from 1.361% to 1.348% – the lowest value since June 21.

"I think we're seeing gold benefit from a plunge in bond yields," said Edward Moya, senior analyst at Oanda. However, investors may reconsider their bullish prospects for bullion against the background of future comments by the US Federal Reserve, which will help strengthen the US currency and ultimately increase yields.

The same opinion is shared by his fellow analyst Marios Hadjikyriacos. He draws attention to the fact that the regulator has increasingly begun to raise the topic of raising interest rates and reducing stimulus measures.

Meanwhile, the minutes of the Federal Reserve meeting will be published today. Investors are waiting for additional information from the regulator about the rate of inflation and the further course of monetary policy.

Recall that as a result of the June meeting, the probability of an increase in interest rates in 2023 was predicted. This caused a panic in the precious metals market, as a result of which the price of gold fell sharply.

Nevertheless, on Wednesday morning, against the background of waiting for important comments from the Fed, the price of gold shows positive dynamics. At the time of preparation of the material, the yellow asset was trading at $1,797.95. The difference from the previous close was $3.75, or 0.21%.

Silver also moved upward, although the asset ended yesterday's session in the red. On Tuesday, it lost 32.7 cents, or 1.2%. This morning, the quotes have already gained 0.3% and approached the $26,253 mark.

Despite the current upward trend, analysts still do not make optimistic forecasts for both precious metals for the third quarter.

For example, Carsten Menke, head of next generation research at Julius Baer, believes that in the next 3 months, yellow and gray metals will repeat the scenario of 2013-2015.

During this period, prices on the precious metals market fluctuated under the influence of two factors. On the one hand, they were supported by the interest of central banks, and on the other hand, they were pulled down by the expectation of an increase in interest rates.

The expert says that all this happened against the background of the general economic downturn and attempts to recover, when the attractiveness of safe haven assets was not high. We are seeing a similar picture now.

Thus, in the third quarter, we should not expect serious price movements either down or up. According to most analysts, the precious metals market will be in a state of consolidation.

Gold and silver will continue to "digest" information regarding the level of inflation in the United States, as well as a possible tightening of monetary policy.

It is the Fed's rhetoric that will become a key factor for metals that will influence their pricing, while the deterioration of the epidemiological situation in the world will fade into the background.

By the end of the quarter, experts predict an average gold price of $1,800. The most optimistic forecast sends the asset above $1,910. There is also an opinion that the value of the precious metal may fall to $1,710.