· Gold prices rose on Monday, holding above the key $1,700 per ounce support level, as a new wave of coronavirus infections in some countries raised expectations of more stimulus measures and lower interest rates.
Spot gold gained 0.3% to $1,706.43 per ounce at 0606GMT, having lost about 1% in the previous session. U.S. gold futures eased 0.4% to $1,707.80.
· "People have bought the dip. Even in the best of circumstances, we are still in an environment where (interest) rates are going to remain very low, fiscal policies are going to remain very accommodative and inflation is going to be high," said IG Markets analyst Kyle Rodda.
Gold is poised to move higher in the longer term and investors are trying to get their hands on the metal before it rockets higher, he said, adding that there was a lot of technical support around the $1,700 level.
Gains in bullion were limited, however, as the dollar firmed and Asian shares rose, with investors looking ahead to more countries restarting their economies, even as some reported an unwelcome pickup in new coronavirus cases.
· "Gold requires a new fundamental trigger. Unless we get a new trigger, like the U.S.-China trade war, we can expect a fall towards $1,680," said Ajay Kedia, director at Kedia Commodities in Mumbai.
· However, the decline would be small due to support from concerns over a second wave of coronavirus infections in some countries, recession worries and interest rate cuts, he said.
· Chinese authorities reported on Sunday what could be the beginning of a new wave of virus cases in northeast China, while South Korea warned of a second wave of new infections.
On the Sino-U.S. trade front, the International Monetary Fund on Friday warned Washington and Beijing against rekindling a tariff war that could weaken recovery from the pandemic, while signalling a possible downward revision of global economic forecasts.
· Highlighting the impact of the pandemic, the U.S. economy shed a record 20.5 million jobs in April, a Labour Department report showed on Friday.
Americans should not expect a quick return to growth, U.S. Federal Reserve officials said last week.
· Speculators reduced their bullish positions in COMEX gold contracts in the week to May 5, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
· Among other metals, palladium rose 2.2% to $1,924.57 an ounce, platinum gained 0.3% to $767.37 and silver climbed 0.2% to $15.48.
· The gold markets initially tried to rally during the trading session on Friday but then pulled back from the triangle that I have drawn on the chart to reach towards the $1700 level. I believe that there is significant support underneath that should continue to turn things back around. The $1695 level should be a significant level. The uptrend line of course does offer support, and of course the 50 day EMA is underneath which should offer significant support. At this point in time, I believe in gold, although Wall Street was a big seller late in the day as “everything is awesome” yet again.
If we can break above the highs from the trading session on Friday, then it is possible that we go looking towards the $1750 level, and then possibly the $1800 level further. To the downside, I would be more than willing to be a buyer underneath the $1700 level and then slowly add as the market works out in my favor. After all, the gold markets are being supported by a multitude of reasons.
The first reason of course is the fact that the central banks around the world continue to flood the markets with liquidity, and therefore hard money will be something that a lot of traders look towards. The natural trade is to buy gold, and that is part of what has been driving this. Furthermore, you can see that the triangle forming is a bit of digestion for the biggest move to the upside. After that, you can also make the argument that we are simply waiting for further bad news, which will more than likely drive the safety trade forward, sending this market much higher.
At this point, I do not really have a scenario in which I am willing to sell gold but would start to rethink things if we were to get below the $1600 level. That is $100 away right now, so I am looking for an opportunity to buy the market “on the cheap.” With all of the cheap money that has been thrown in the market, I do believe that eventually gold markets will take off and we could be at the very beginnings of a longer-term bull market. Buying on the dips has worked for several months, and I do not see that changing anytime soon. Simply adding to trades that work out in your favor will be the best way going forward.
· Kitco | Wall St., Main St. expect more gold-price gains in wake of poor U.S. jobs data
Wall Street and Main Street look for gold to keep rising next week after a report Friday confirming what was widely expected – a lot of workers lost their jobs in the U.S. last month.
The Labor Department reported that April nonfarm payrolls fell 20.5 million, while the unemployment rate soared to 14.7%, the highest level since the early 1930s. Dramatic labor-market was weakness expected based on weekly initial jobless claims over the last several weeks.
“There is a lot of uncertainty if some of these jobs are ever going to come back,” said Sean Lusk, co-director of commercial hedging with Walsh Trading. “Some of them won’t; hopefully most of them will.
“I think it’s just a matter of time before we [gold prices] make a run to at least $1,750...and potentially challenge the high for the year,” he continued, referring to the mid-May peak of $1,788.80 an ounce in the Comex June futures.
Six out of 11 Wall Street voters, or 55%, said they are bullish for the week ahead. Three voters, or 27%, called for lower prices, while two, or 18%, were neutral.
Meanwhile, 750 votes were cast in an online Main Street poll. A total of 502 voters, or 67%, looked for gold to rise in the next week. Another 139, or 19%, said lower, while 109, or 15%, were neutral.
In the last survey for the current trading week now winding down, Wall Street and Main Street respondents alike were bullish. Just before 11 a.m. EDT on Friday, Comex June gold was 1.6% higher for the week so far to $1,727.90 an ounce.
Richard Baker, editor of the Eureka Miner’s Report, is among the majority looking for gold to rise some more. He commented that while the the loss of 20.5 million jobs in April was better than the expected 21.5 million loss and there appears to be some lessening in recent U.S.-China tensions, “these are at best incremental improvements to a horrendous situation.” Thus, Friday morning’s rush into "risk-on" assets could just as easily be replaced by a "risk-off" rush to the exits, especially after another bad headline, he said.
“The covid-19 viral infection of global markets has dulled demand for physical gold in China and India, and some central banks have eased on new purchases (e.g., Russia),” Baker said. “This void has been amply filled by investors seeking a safe haven. This makes gold all the more sensitive to moves in the stock markets. Looking forward then, volatility in gold price should be expected to continue. I believe it likely gold will make a run at the $1,750 level next week with silver poking its head above $16 per ounce.”
· Gold Price Analysis: Mildly positive above $1,700 as US-China tension renews
Following the recent uptick, Gold prices take the bids near $1,710, up around 0.50% on a day, during the Asian session on Monday. The fresh fears of the US-China trade war are again helping the safe-haven while the coronavirus (COVID-19) updates offer a little clear direction.
Technical analysis
A daily closing beyond 21-day SMA, currently near $1,708, could escalate the yellow metal’s recovery moves towards the monthly resistance line near $1,723. Meanwhile, an ascending trend line from April 21, at $1,677 now, limits the bullion’s immediate declines.
· Australia to outpace China as world's top gold producer in 2021
In its latest report, Australia-focused market analyst Resources Monitor, stated that Australia is expected to overtake China as the world’s no. 1 gold producer next year.
“Australia’s role as a cost-effective producer is giving it the advantage it needs to take the leading position.”
“These margins paired with gold prices that, despite recent pressures, have been rising for the past year and a half, propel miners Down Under to go on with planned new mines or expansions.”
Reference: Reuters, FX Street,Kitco,Daily Forex
Thai
Eng