The gold price hit strong resistance at the $1,290 mark on Friday and the weakness has continued in today’s trading session but some predict it’s only a matter of time for the uptrend to continue with a break above $1,300.
Tensions between the USA and North Korea eased down over the weekend which may have led to some profit taking in gold, but not everyone expects this situation to last for long and once again investors will move into gold as a safe haven,
"Maybe geopolitical tensions are easing so it's natural for gold to come down a bit, but it's very unpredictable because prices could rise to another high because of some change," said Richard Xu, a fund manager at China's biggest gold exchange-traded fund, HuaAn Gold.
Mr Hu also noted that besides the war of words between the US and North Korea, gold was fundamentally in a good position which will also provide support for the price.
"After the sharp selloff in the dollar, over the weekend nothing happened so I guess the threat from the (Korean) peninsula is low, but we think gold fundamentals are strong," he said
Another boost for gold is the US dollar, which is expected to come under further pressure in the weeks ahead after inflation figures hit the market below expectations and at 1.7 percent, are still well short of the US Federal Reserve’s target figure of 2 percent.
It may force the central bank to hold off raising rates in the US for the foreseeable future which will add to the appeal of gold.
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