Squatting down to jump higher? Gold will soon regain the 1500 mark

SMM: although gold prices fell sharply on Friday, analysts remain optimistic that gold prices will soon return to the key $1500 level.

Gold fell more than 1 per cent on Friday, with (Comex) December gold futures trading at a two-week low of $1487.70 an ounce on the New York Mercantile Futures Exchange.

Optimistic risk appetite has pushed stocks higher and pushed down the price of gold as investors wait for some possible trade deals between the US and China.

One of the biggest market drivers on Friday was the optimism expressed by US President Donald Trump ahead of his meeting with Chinese Vice Premier Liu he at the White House on Friday afternoon.

"at the China Trade Conference, a good thing is happening," Trump wrote on Twitter. "

Despite the sharp fall in gold prices, analysts believe the price will return to a key $1500 level and may test $1525 resistance.

"after the sell-off and margin sell-off before Friday's weekend, gold is likely to return to a better position next week. In the coming weeks, gold will eventually return to an area of more than $1500, "RBC Wealth Management Managing Director George Gero Jintuo News said Friday."

Jim Wyckoff, senior technical analyst at Kitco, said the technical side will also support gold's performance next week.

"people who buy at bargains come in when prices fall. The chart as a whole remains bullish, and geopolitics could still quickly be the top factor in the market, supporting safe-haven gold and silver (17.551,0.010.03 per cent), "Wyckoff explained.

Phillip Streible, senior market strategist at RJO Futures, said investors would want to be long if gold rose above $1525.

"if the trade agreement breaks down, geopolitical tensions rise and economic data are weak, gold futures prices will pick up," he said. If the price of gold exceeds $1525, you will be long, because our target is still $1565. "

Geopolitical risks don't go away.

The progress of Brexit has also brought some important optimism to the market because of news that the UK and the European Union plan to hold "intensive" negotiations on the Brexit agreement.

Barnier (Michel Barnier), the EU's chief negotiator, and Barclays (Stephen Barclay), the British negotiator, called the earlier talks "constructive" and gave hope to the market.

However, in addition to some good news about Brexit, there is still a series of unresolved geopolitical issues in the market.

"there are new concerns everywhere investors see, whether it's Iran, the Middle East, Turkey, the economy, the global economic slowdown, some of which are anti-inflationary," Gero said. "investors should see if the good news about Brexit will last."

Wyckoff points out that any new geopolitical conflict could quickly push up the price of gold.

"there are still too many geopolitical events that could dampen traders' enthusiasm. If world economic growth slows, tensions between the United States and Iran, the United States and North Korea, the United States and China, and Brexit, "he said."

On Friday afternoon, the market was already busy digesting news that 3000 people had been deployed or their tasks extended to the Middle East, a move purporting to "ensure and strengthen Saudi Arabia's defenses," according to the Pentagon.

There are also reports that Turkey has stepped up its crackdown on Kurdish militias in northeastern Syria, and the United Nations says about 100000 people have left their homes in the face of Turkish military incursions.

"the humanitarian impact is already beginning to emerge. An estimated 100000 people have left their homes, "the United Nations said in a statement.

The Fed's position is more hawkish.

The market is less likely to cut interest rates in October, with the latest data from FedWatch of (CME), the Chicago Mercantile Exchange, showing a 67 per cent chance of a cut in October, up from a forecast of 87 per cent a few days ago.

The latest hawkish spokesman is Kaplan, chairman of the Dallas Fed. Kaplan said it was important to maintain an "open mind" about the need for further monetary easing.

"I'm going to take some time to monitor the economy carefully. I plan to remain vigilant and open-minded about whether the federal funds rate for further action is appropriate, "Kaplan said on Thursday.

Melek said Kaplan's statement had led to some changes in expectations of a cut in interest rates.

Kaplan told the market yesterday that there is little incentive to take a lot of monetary measures to stimulate the economy. He rejects the whole idea that inflation is lower than expected, "Melek points out."

The Gero added that the Fed could delay easing monetary policy, which would be detrimental to gold prices. Some Fed spokesmen, such as Kaplan, are tougher than usual. I estimate that the Fed has more data than it has published. "

Focus on data

The most important figure for next week will be US retail sales figures released on Wednesday, which are expected to rise 0.3 per cent in September. The Fed's brown book is also scheduled for release on Wednesday.

Retail sales are a key measure of optimism. Any fatigue should help gold, "Melek said.

Other key data to watch include Tuesday's New York Fed manufacturing index, as well as Thursday's data on the U. S. housing market, industrial production and the Philadelphia Fed manufacturing index.

"the Fed made it-this is October data, and it's very important. We will see whether this weakness will continue into the second half of the year, "Melek added."

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