SEATTLE (Scrap Monster): According to Barclays, the recent gains in gold prices are unlikely to sustain over a longer term. The strength in US dollar and the world equities may continue to pose near-term hurdles for the precious yellow metal. Any price level above $ 1,300 per Oz must be viewed as opportunity to sell gold, Barclays added.
The macro economic data indicators and investor flows are neutral for gold. The US unemployment rate is expected to fall to 6.2% in June as against 6.3% in May this year. The payrolls are likely to rise to 250,000 in June, significantly higher when compared with 217,000 seen in May. Any upside for jobs growth would imply further downside for gold. Moreover, analysts predict a broad-based US dollar rally in the near term, which again would weaken the gold's prospects.
The net gold holdings have seen an outflow during the month of April this year. The flows continued to remain negative in May and thus far in June. Barclays notes that ETPs are not seen involved in hefty net redemptions in 2014, as was seen during last year. However, the holdings are not expected to provide any major support to gold prices and are likely to remain weak during entire year 2014.
According to Barclays, the weak monsoon may dent the demand for gold in rural areas. The run up in equities could also turn unfavorable for gold. However, the firm believes that gold demand in China is expected to remain positive during 2014.