On Friday July 27 in London we look like Spot gold closed at $ 1.081 US dollars per ounce, thus falling to 4.6% following the previous week which also fell 2.3%. base on the previous events, this situation does not look good for the gold. Experts project that it can reach $ 1,000 an ounce in the upcoming weeks. Their best advice is to probe the short side on any good short covering rallies that develop from time to time. We don’t certainly expect to see some short covering anytime soon. In the short term the market will find a support around $ 1,070 while there is strong resistance around $ 1.105 to $ 1.110 an ounce level basis spot.
It has always been known for the dual nature of gold as a currency and a commodity as of today, it’s not seems as both. The extreme drop in prices has taking it to a five-year low which it can decline even more. Although shorts will eventually have to cover, some investor’s confidence should return to the market post a fed-hike, which means profits will be slower to than previously thought.
Monday’s fall, correlates to strong selling on the Comex futures and unreasonable to attribute it to any immediate change in fundamentals. But it is undeniable that in recent weeks some of the best remaining hope for rising gold have evaporated.
In the worst case, when the dollar appreciates by another 20% and Treasury yields return to 4%, the price of gold could easily fall to $ 850.
Our base case assumes that further dollar gains will be limited and that the drag from gradual Fed tightening will be offset by a pick-up in demand from consumers and central banks in emerging markets.
Best scenario is that further dollar gains will be limited and that the drag from gradual Fed tightening will be offset by a pick-up in demand from consumers and central banks in emerging markets.
Silver has not been the talk of the week.
Silver fell 3.5% last week after falling 2.8% in the previous week. Silver has lowered its price range relative to gold sharp move lower. The support is seen as $ 14.30 in spot area basis while resistance above is around the level of the base $ 15.80. At the current level of support will be crucial if broken would look $ 13.70 as the next strong support level.