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Inflection point? Gold market outlook: gold bulls' morale is high next week European silver resolution, inflation and "terrorist data" come hand in hand.
Jul 11,2020 13:56CST
The content below was translated by Tencent automatically for reference.

SMM: on Friday, analysts said gold prices have risen for the fifth week in a row, and in dollar terms, the bullish trend is expected to reach a record high set in 2011.

Spot gold traded near the $1800 / oz mark in the US market. COMEX august gold futures closed down 0.1% at $1801.90 an ounce, up about 0.7% this week and rising for the fifth week in a row.

Investors seem to be torn between hopes of an economic recovery and the worrying number of rising coronavirus cases in the United States, which could slow things down again.

On Thursday, the United States reported 63000 new confirmed cases, an all-time high. Despite the upward trend in gold prices, the stock market rose on Friday, largely ignoring concerns about the new crown virus.

"reopening may not be as fast as people think. More factories are likely to close in states such as Florida and Texas. In addition, based on the experience of the United States, other countries may be more cautious when reopening, "Bart Melek, head of global strategy at TD Securities, told Kitco News on Friday.

Analysts do not rule out a temporary consolidation of gold around $1800, saying investors will buy bargain-hunting as gold prices eventually rise.

"at present, we may consolidate near the current level. But the trend is upward. The reason is that the economic recovery may be slightly slower. The reality is that risk appetite may not rise forever. This understanding will be consolidated and the Fed will eventually do more, not less, "Melek said. "Gold prices will consolidate and rise here."

Everett Millman, an expert on precious metals in gold coins at Gainesville, said it was a very bullish trend for gold prices to stay above $1800 this week. "We haven't seen this level in nine years, so I expect we will test support several times," Millman said.

The price of gold has passed the $1800 mark.

Analysts point out that gold prices will climb further above $1800 next week. "it looks like we're about to test an all-time high of around $1900," Millman said. " He added that next week's new support level would be $1800.

"all the factors that underpinned gold prices a year ago are still there. Without improvement or change. I expect gold prices to continue to rise in the second half of 2020. "

Georgette Boele, senior foreign exchange and precious metals strategist at Dutch bank (ABN Amro), said gold was on track to hit a record high of $1921 set in September 2011.

Gold in dollar terms is close to an all-time high of $1921. The factors for the continued rise in the price of gold are in place. Aggressive monetary easing, ultra-low interest rates, negative real yields in the US, fiscal stimulus and technical prospects all support gold prices, "Boele said this week.

FXTM market analyst Han Tan is also bullish, saying, "given the low real yields in the United States and the stubborn risk aversion in the market, this is clearly a favorable environment for gold and is expected to repeat the record closing price of $1900.20 set on September 5, 2011."

Melek is also optimistic about gold next week. "the futures gold test is $1,829m $30. It would not be surprising if the weak data caused gold to fall to $1840. " On the downside, Melek is looking at the $1790 level.

The next resistance level that LaSalle Futures Group senior market strategist Nedoss focuses on is $1830. "I expect gold prices to rise further next week," he said. I don't think we will break this upward trend. "

Nedoss said panic deals began to emerge, with new buyers turning to gold as part of a diversified portfolio during this period of uncertainty.

The price of gold is up 15% and 16% so far this year. As an asset class, it is recovering. Traditionally, 60 per cent of the investment portfolio is 40 per cent of the portfolio is stocks and bonds. Now, you can see that precious metals are entering the combination. People put more gold into their portfolios-just look at the inflows of ETF. The message I got from it is that gold is included in the portfolio to seek protection, "Nedoss said.

Focus on next week

With regard to macroeconomic data, there is growing concern that the U. S. economic recovery will stagnate after June, said Michael Pearce, a senior U. S. economist at Capital Macro.

"there are more and more indicators that the economic recovery stalled at the end of June and early July, in part because of the resurgence of viral infections," he said. It is clear that there is a risk that the virus will continue to spread indefinitely in the coming weeks, pushing the economic recovery back. "

But it may not be all about reinfection, the economist added, pointing out that the US may just be entering a new phase of recovery that will be "slower and more intermittent".

Some important announcements to watch next week include US June CPI on Tuesday, US industrial production in June on Wednesday, US retail sales on Thursday, ECB interest rate decision on Thursday, US jobless claims on Thursday, US construction permits on Friday and housing starts in June.

Starting next week, another key factor to watch is the US corporate earnings season, which is likely to show a bleak economic outlook.

Although global stock markets ignored the deterioration of the global economy last quarter, the time for general accounts may be coming when the US earnings season begins next week. Second-quarter results will expose the impact of the new crown pandemic to a greater extent than the previous quarter's data, which could prove to be one of the worst quarters on Wall Street. It remains to be seen whether market participants will have the stomach to digest these disappointing data, "Tan said on Friday."

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