BELIEF in gold wavered just as it approached the $2,000/oz level, said Bloomberg News which reported that gold futures briefly tested new records before interest petered out at $1,981/oz. The spot gold price is currently at $1,908/oz, a decline of 1.76%.
“This is the highest high and in every time zone the traders have been trying to push it higher and higher,” Brian Lan, MD of Singapore-based dealer GoldSilver Central told the newswire. Spot gold’s gains petered out once it reached $1,981 an ounce.
“You see the strength wasn’t there. They were trying to try a few more times and a correction is due. So probably you might see some profit-taking already,” Lan said.
Despite the retreat, market watchers said the interest in gold which had taken it to near record levels was intact.
“Debasement of the US dollar, the more negative real rates, and you’ve still got lingering uncertainties around geopolitics and the US-China relationship,” Wayne Gordon, executive director for commodities and foreign exchange at UBS Group AG’s wealth-management unit told Bloomberg. “That combination of things is what’s pushing gold harder,” he said.
There’s a long line of bullish factors buoying markets: the dollar remains weak, geopolitical tensions are rising, real rates have tumbled, and governments and central banks worldwide have unleashed vast stimulus measures to try and boost economies, said Bloomberg.
This week’s Federal Reserve meeting on July 28-29 may provide more direction for traders, said Bloomberg News. There are some expectations that setbacks in the global fight against the pandemic will push Chairman Jerome Powell to signal that rates will stay near zero for longer.
“The message from the Fed meeting is expected to be dovish, reiterating the need for more fiscal measures, which is likely to be supportive of gold,” said Nicholas Frappell, global general manager at Sydney-based ABC Bullion. “With real interest rates deep in negative territory and the coronavirus resurgence hitting the dollar index hard, that’s good for gold.”