Gold prices unlikely to move higher from here in near term - analysts

© Reuters.

By Senad Karaahmetovic 

Citi's commodity strategists warned against betting on higher gold prices in the near term. Gold prices fell in February and have now stabilized in the low $1,800s.

Commodity investors will be closely watching the U.S. jobs and inflation data on Friday and next Tuesday, respectively. The Fed is likely to use these data as key inputs before deciding its next move.

"We see limited scope for a price rebound to the $1,950 YTD highs in the short term given hawkish risks at the March FOMC. If February labor data or CPI run hot, the yellow metal may struggle to sustain topside north of $1,850/oz over the next 1-2M even if policymakers stick with hiking 0.25% as opposed to 0.50% this month," the strategists wrote in a client note.

"On the other hand, a dovish 0.25% move, if it follows weak inflation for February, could see the market rally to $1,875-1,900. A hawkish dot-plot on 0.50% could see gold quickly fall below $1,800," the strategists added.

This view is in line with what HSBC analysts wrote last week when they warned that gold prices have limited upside.

"There may still be some downward pressure on gold near term as global monetary policy still seems likely to err on the hawkish side," the analysts said in a client note.

"While the broader financial markets still seem to be expecting more rate cuts in H2 2022, there has been push back from the Fed. This could keep pressure on gold near term, and it may be too early to call for a recovery in prices."

The gold metal staged a solid rally, adding nearly 1% to trade near $1,830/oz.