When will the gold exchange rate come out of the downward trend?

According to foreign analysts, the behavior of the precious metal over the next few weeks will play a key role in determining where the course will end up at the end of the year. Everything will depend on US employment and inflation data, as gold usually rises in price amid escalating geopolitical instability and market volatility.

In the middle of last week, the gold exchange rate rebounded from a 2.5-year low, rushing towards $1,700 per ounce. The figure reached $1,660 an ounce by the end of the week, almost 1% higher on a weekly basis but in line with the downward trend of the past six months.

Comment by Frank Cholley, analyst at RJO Futures: "On Wednesday, we saw a key reversal in the dynamics. The exchange rate rebounded from the lows, ending trading higher. There was a similar situation on Thursday and Friday. The dynamics is as follows: from a short-term downward trend to trade in the lateral channel and from it up. If the gold rate exceeds the mark of $1,700 per ounce, then the uptrend will be resumed, and the indicator may rise to $1,740. "

Until last week, the technical performance at the gold rate was very poor, especially after falling below $1680. A sharp drop below $1,600 an ounce would make it possible to move toward the $1,290 mark, according to Michael Boutros, an analyst at "DailyFX." However, if the rate crosses the $1,706 per ounce mark, then the downward trend will be broken.

However, according to Boutros, such a breakthrough should occur within the next two weeks. Otherwise, we will see a downgrade. Here's his comment: "The extraordinary speed and scale of the Fed's rate hikes is having a negative impact on gold."

Geopolitical tensions may be one of those short-term factors that can raise the gold rate higher. For example, further escalation of the Ukrainian crisis could help gold if there is a real threat of a nuclear strike.

However, it should be remembered that the influence of geopolitical events on gold is temporary. As Bart Melek, an analyst at TD Securities, said: "Every time geopolitical risk increases, it always leads to a short-term appreciation."

However, given the situation in monetary policy, it will be quite difficult to reverse the current downward trend in the gold exchange rate.