Gold price predictions keep coming. The latest estimates came from economists at ANZ Bank and Credit Suisse. Let’s look at the details of the news.
Investor behavior and economic risks for gold price
Tactical longs also dwindled as investors sold off their gold ETF holdings throughout June. However, the yield curve has declined to its lowest level in recent years. In this context, the risk of recession in the USA has increased. Such risks often cause funds to go gold again. Accordingly, this may help stabilize the price.
The physical premium of gold indicates sluggish demand. Imports in India and China continue to be strong. Although China’s jewelry sales have slowed, they continue to grow, contributing to overall gold demand.
Technical view for yellow metal
According to Credit Suisse analysts, gold price is likely to find a key support level at $1,850, which is the 200-day moving average (DMA). Currently, gold is trading below the 100-DMA support. This points to the potential for more weakness and pullback support at $1,900/1,890. It probably goes all the way back to 200-DMA in 1,850.
On the other hand, a large base is expected at this level, which could trigger an initial recovery towards $1,985, followed by a retest of the key resistance at record highs of $2,063/2,075. The overall trend remains inclined towards an eventual leap towards new record highs later in the year.
Gold price volatility
The gold market remained stable amid hawkish statements from Federal Reserve Chairman Jerome Powell. But without new catalysts, gold risks a deeper sell-off, according to a company called MKS PAMP. Gold fell below $1,950 an ounce this week before finding support at $1,940. Currently, Comex gold futures for August delivery are trading sideways at $1,946.20 an ounce. The session hit a daily low of $1,929.30 for August gold futures contracts.
Nicky Shiels, head of metals strategy at MKS PAMP, suggests that while gold appears to be waiting for a positive catalyst, the prolonged absence of such impetus raises the risk of further pullbacks. Shiels acknowledges the existence of long-term demand factors. However, he highlights that gold’s prolonged stagnation and slow news cycle typically lead to a bearish move in the near-term.
Bear trap and Gold price range
The $1,940-1,950 per ounce range is aligned with the 100-day moving average. This is considered a bear trap. Shiels emphasizes that spot gold has failed to approach below this threshold sustainably in the past. However, strong housing data reveal an interesting picture. This caused a significant drop in gold prices by $30.
There’s the fact that Powell has a hawkish stance and is forecasting two more rate hikes this year. Accordingly, Shiels believes that all interest rate cut bets for 2023 are no longer valid. As a result, he says, the premium underneath needs to be resolved.
Supporting factors for gold rally
Three key factors continue to support the possibility of gold’s rise. Aggressive central bank gold purchases, strong physical demand and retail gold and bullion purchases. Shiels warns that some indicators of weakness could lead to sales. These include sustained ETF outflows, lack of interest from discretionary accounts, and soft physical demand in China.
Shanghai Gold Exchange (SGE) is currently discounted after previous premiums. According to this, China’s gold imports decreased by 13% compared to the previous month. Retail sales of gold and silver jewelry slumped, driven by depressed demand and a weaker yuan.
upcoming events
This week will be marked by Powell’s statement and the Bank of England’s interest rate decision. Also, the performance of gold as it closes the second quarter is important. Accordingly, it will provide further guidance on the price direction for the summer months. Despite hawkish rhetoric, a strong US dollar, high US real interest rates, and a lack of negative news on financial instability and geopolitical issues, gold prices have consistently hit higher lows and higher peaks over the past three quarters.
After all cryptocoin.com When we look at it as a whole, the gold market maintains its stability in a hawkish environment. A deeper selling risk looms on the horizon. Traders and investors should carefully monitor the key factors and vulnerabilities addressed in order to navigate the market effectively.
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