After hitting a low of $1,282 in yesterday’s trading session the gold price has managed to recover and is now trading at $1,293 late in the European session so the question begs, is this the start of some sort of rally or is it just a false bounce?
The precious metal has been under pressure for more than a month now on the back of a stronger dollar and rising US bond yields which are attracting investors seeking bigger returns which doesn’t help the gold price as it is not an interest-bearing asset.
The last few days have now left analysts divided on the future of the gold price with some saying this may be the beginning of a sustained rally and especially if gold can rise back up through the psychological $1,300 mark.
“Gold came right down to our $1,280 level and this should be the bottom for the move. Gold has been bullied by the strong dollar, interest rates and rallying equities but appears to have put in a bottom. The $1,280 level should hold and the rally should be on, with only a small chance to see $1,260”. said Todd Horwitz, chief market strategist of BubbaTrading.com
Others believe that gold will find it very difficult to push much higher in the near term due to factors such as the US dollar’s recent rally among other things and we should expect further losses before it finally finds a bottom.
The combination of a stronger US dollar and higher US 10 year nominal and real yields is a very negative environment for gold prices,” said ABN Amro senior precious metals and diamond analyst Georgette Boele.
“We expect gold price weakness to continue in the coming weeks and months. It is likely that gold prices will fall below USD 1,275 per ounce and test USD 1,250 per ounce this year followed by a stabilization,” she added.
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