Gold is showing signs prices are well supported at the $1200 level, although a break above $1230 an ounce is needed to set the stages for much higher gains. But don’t expect much in the way of gains over the next several weeks as the seasonally slow summer doldrums drag on.
By Melissa Pistilli–Exclusive to Gold Investing News
After reaching a two-week high of $1218.80 an ounce to close at $1213.50 in New York Tuesday, gold futures had a volatile trading day with prices moving in a wide range between $1202.50 and $1218.20 an ounce before closing at $1207 an ounce Wednesday.
Investors seemed torn between risk and safe-haven assets as US stock indexes rallied and the dollar dove to a two-month low of 1.2777 against the euro. US retail sales figures sparked deflation concerns, falling for the second month in a row. A bout of profit taking on the heels of Tuesday’s rally also played a part in Wednesday’s ups and downs.
The unwinding of the gold-euro position is also largely responsible for gold’s rather weak performance as of late, despite yesterday’s short-lived rally, say some analysts. Investors who purchased gold in euros are cashing in as the euro strengthens against the dollar.
The euro has been performing well, posting a two-month high in earlier in the day Wednesday as the region’s sovereign debt crisis seems to be under control (for the moment). Bond auctions have done well, especially Greek, German and Portuguese bonds. However, there are still concerns Fitch may soon downgrade Spain’s credit rating.
Gold is showing signs prices are well supported at the $1200 level, although a break above $1230 an ounce is needed to set the stages for much higher gains. But don’t expect much in the way of gains over the next several weeks as the seasonally slow summer doldrums drag on. The markets are looking toward July 23 for the results of the stress tests on EU financial institutions. Another factor is demand from India, which is waning and not likely to pick up until the fall once the wedding season starts. For now, gold prices are locked in a trading range between $1185 and $1220 an ounce.