Ceyhun Yavaş: Volatility in gold prices may be seen on an ounce basis in early 2024
The Central Bank of the Republic of Turkey's Monetary Policy Committee raised the policy rate, the one-week repo auction rate, by 250 basis points to 42.5 percent. So, how did the markets react to this situation? When will gram gold exceed 2,000 liras?
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Dinamik Yatırım Menkul Değerler Research Specialist Ceyhun Yavaş, who provided statements on the subject, commented as follows:
"Following the decision, extreme volatility was observed in the markets, but then the index turned downward. Towards the end of the session, we followed the strengthening of purchases. We observed that liquidity and, in parallel, volumes decreased during the interest rate hike cycle and in the final days of 2023. We can say that with the effect of the rise in deposit interest rates, alternative investment vehicles outside the stock market have come to the agenda for domestic investors.
However, we are of the opinion that the steps taken towards orthodox policies have attracted the interest of foreign investors, and this situation has at least partially compensated for the domestic investors who have exited.
At this point, we should not ignore the effects of the approaching New Year. In 2024, although there may be sectoral divergences, we believe that the rise in the stock market will continue."
"In 2023, after the elections, the policy rate was increased, and while this was reflected in deposits, average deposit interest rates remained around 30%, lagging behind the dollar, euro, gold, and the stock market.
In the dollar and euro, a return of approximately 60% was achieved with a moderate rise that we can call controlled. In gold, this approached 80% with the increase in interest rate cut expectations for the Fed. The BIST 100 index remained at the 55% level.
Although the expectation of 3 interest rate cuts for 2024 was formed at the Fed's meeting in December, this expectation has risen to 6 in the markets.
We believe that the market is pricing in too much, that inflationary risks are still on the table, and that the effects of the interest rate hike cycle have not yet been fully seen."
In this picture, we believe that the Fed's influence on the markets will increase and volatility may be seen in gold prices on an ounce basis in early 2024.
However, when we consider the effect of the dollar on gold, we are of the opinion that the moderate rise may gain momentum with the approaching elections and expectations of incentives for construction and export companies. On a technical basis, if persistence is maintained above 1,924 TL, we can start talking about prices above 2,000 TL," he said.