WEEKLY PRICE FORECAST: LITTLE ROLL
- Gold prices there may be room to rise higher in the near future
- Depressive real exchange rates, concerns about the delta coronavirus variant and the slowdown in China can be seen as a bullish variable for the yellow metal
- Look at us Real-time news page for timely market news and analysis
Gold (XAU /USD) may not yet be out of the woods completely after a large sale in June, but it has some positive catalysts for short-term supportthis could lead to a price of $ 1,850. First, the decline in real yields in the United States can be considered bullish driver. The US 10-year TIP fell briefly to a five-month low of -0.95 this week, as the Treasury’s 10-year yield fell below 1.30%, the lowest level since mid-February. Although the relationship does not always last perfectly, real interest rates and gold prices often move in the opposite direction financial markets.
Another tailwind because the yellow metal finished in the background is highly contagious Covid-19 strain: Delta variant. Although the US has so far managed to prevent major Delta outbreaks, pathogen will quickly spread to other countries such as Britain, Spain, Portugal, Israel, etc. Many investors believe that an increase in the number of cases of the more transferable option may lead new prevention measures and consider the reintroduction of travel restrictions (PRMs), the consumer negative mood labor supply issues. Weaker growth may in turn lead to risk aversion and delay the normalization of the monetary policy of the Federal Reserve and other central banks, increasing appetite safe–shelter and notinterest bearing assets.
Last but not least, the extinction of credit impulse In China, cooling activity can also be a supporting factor for gold. On Friday, the PBOC announced that it would reduce the reserve requirement ratio for all banks by 50 basis points from July, aimed at stimulating bank lending. stand up small businesses are struggling. Needless to say, iIncreased liquidity and fears that the second largest economy will shake may strengthen demand for gold. Traders also believe that if China adds stimulus at a time when conditions around the world are said to be improving, the Fed will be reluctant to go the other way and pull the carpet out of the economic recovery. Nevertheless, the stars appear to be aligned “Lower – longer” rate scenario, XAU / USD positive variable.
All of these reasons lead me to believe that gold prices may rise slightly over the next few weeks, all the more so since July, precious metal seasonal bullish month.
On the back, i.e.f investors will view inflation with different eyes (less transient), Fedi decreases timeline which could be raised in the longer termend rates. This would be negative for interest-free assets. AnywayJudging by the behavior of fixed income, markets seem to be subject to a temporary theory as of late. Tuesday’s US inflation data may confirm this assumption, as the June CPI is expected to slow to 4.9% from 5%. Be sure to check for important market reports when crossing wires DailyFX economic calendar.
COST PRICES (XAU / USD) DAY CARD
TRADERS ‘EDUCATIONAL TOOLS
—Written by DailyFX market strategist Diego Colman
Follow me on Twitter: @DColmanFX