The price of gold rose sharply on Tuesday, testing a high of around $1,984 per ounce, as a worsening US dollar depreciated with the important economic indicators of Core Retail Sales and Retail Sales down for June.
According to Forex Factory, Core Retail Sales and Retail Sales both reported worse than expected figures that were also lower than the previous month’s actual data.
PP Link Securities business manager Chhea Chhayheng said: “Better global demand for precious metals like gold would result from a US and/or global recession.
“To avoid such an economic contraction, major central banks will have to continue tightening their monetary policies and raising interest rates. However, the rate of global growth might not be high enough to do so.”
So could gold again reach $2,000 per ounce?
Kitco’s Neils Christensen reported on July 18: “Julia Cordova, founder of Cordovatrades.com, said that gold’s price action is forming a technical bull-flag pattern, and a weekly close above $1,973 would be a breakout move.
“She added that the next resistance level to watch would be around $2,017 to $2,020. She said that this level could be tested as early as next week.”
Returning to interest rates, and investors and traders should bear in mind that gold may experience another short drop on fears of a new US interest hike, with the price already retracing to around $1,974 per ounce on Wednesday.
According to Investing.com: “All eyes are now on the [Federal Reserve] and what it will do to rates when its policy-makers sit again on July 26 to decide on rates.
“While [the] Federal Open Market Committee of the Fed decided to pass on a hike last month, economists think in all likelihood it will vote for a 25-basis point increase this time, in keeping with its recent pace of hikes.”
Technically, as of Wednesday the price of gold was still in an uptrend mood, moving between $1,960 to $1,984 measured in the daily timeframe, with key resistance and support at $1,984 and $1,972, respectively.