“I am still bullish,” said Kevin Grady, president of Phoenix Futures and Options LLC. “We saw some liquidation in the futures this week due to the rolling of the June contract into August. The cost to roll to August traded as high as $22. That is causing some funds to rethink holding their long position. That being said, the global inflationary environment should continue to give gold a floor on sell-offs and will eventually lead to higher prices.”
Phil Flynn, senior market analyst with at Price Futures Group, also looks for gold to tick higher.
“Gold has had fits and starts,” Flynn said. “Money flowing back into stocks has taken away some of gold’s luster. Yet increasing tensions between the U.S. and China and continued economic stimulus around the globe should give gold an upward track.”
Sean Lusk, co-director of commercial hedging with Walsh Trading, also sees gold higher due to rising tensions between the U.S. and China. For one thing, that could end up being a “speed bump” for a U.S. stock market that has been speeding ahead lately, he said. Gold has also been helped by a downside break in the U.S. dollar below chart support, he added.
“If that continues to deteriorate, that only helps gold in the long run,” Lusk said.
Jim Wyckoff, senior technical analyst with Kitco, looks for gold to trade higher since the chart picture remains bullish and “risk aversion increases due to China worries.”
Charlie Nedoss, senior market strategist with LaSalle Futures Group, cited not only the technicals but geopolitical jitters and the softer U.S. dollar as factors that could help August gold test $1,760 and maybe even $1,780. As of when he spoke, he was encouraged that August gold was above its 20-day average of $1,735.20 and had a chance to finish the week above the 10-day average of $1,743.90.
“The geopolitical uncertainty is starting to kick in with what’s going on with China and what’s going on in the Middle East,” Nedoss said. “You have the dollar on the ropes and coming off, and that’s going to be supportive of gold in the next week.”
Meanwhile, Daniel Pavilonis, senior commodities broker with RJO Futures, anticipates a pullback in gold next week. He commented that gold has been trapped in a range below $1,780 an ounce.
“Ultimately, if we see liquidation in the equities markets, I think you’re going to see liquidation in gold too,” he said. This occurred back in March when stocks went into a free fall and gold fell with it, with analysts at the time saying investors were having to sell assets across the board to raise cash, in many instances to cover margin calls.
Reference: Kitco
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