Menu Close

After ‘momentary correction’ gold price is ready to attack $1,800

Gold is looking at another volatile week with an attempt at breaching the $1,800 an ounce level, according to analysts.

The yellow metal is wrapping up a very exciting trading week after seeing prices hit 7.5-year highs and climbing to $1,796.10 on Wednesday. After some consolidation, prices are back above $1,770 with August Comex futures last trading at $1,780.10, up 0.54% on the day.

The risk-off sentiment in the market has been helping gold maintain its bullish momentum, but higher U.S. dollar has been stealing some safe-haven attention from gold. “The U.S. dollar is making a comeback, which is affecting commodity prices,” said Gainesville Coins precious metals expert Everett Millman.

At the forefront of investors’ minds is the rising COVID-19 reinfection rate in the U.S. The number of new cases rose at least 39,818 on Thursday, which is the highest one-day increase in the U.S. to date.

Concerns around how this will impact the U.S. economic recovery has led to another major stock market selloff on Friday, dragging the Dow down 500 points after Texas Governor Greg Abbott rolled back some of the state’s reopening measures. “At this time, it is clear that the rise in cases is largely driven by certain types of activities, including Texans congregating in bars,” Abbott said in a release.

Risk-off sentiment is good for gold but a significant escalation in coronavirus cases could potentially hamper the gold rally because at the end of the day it all comes back to inflation expectations, TD Securities head of global strategy Bart Melek told Kitco News on Friday.

“What we are seeing is a counter-intuitive phenomenon happening. On Friday morning, gold dropped along with equity markets,” Melek said. “The yellow metal’s third attempt to break out into the $1,800s was interrupted by renewed virus concerns, which have paused the rise in long-term inflation expectations that we have seen over the past few trading session.”

Also weighing on the financial markets is the Federal Reserve’s decision on Thursday to limit dividend payments and bar share repurchases until at least the fourth quarter following its annual stress test.

View: Source

View: More news

Recent News