Gold Price Increases On Technical Buying
With gold prices climbing Monday afternoon, gold investors can take solace in the yellow metal reaching the $1200 handle, which is the highest gold price in nearly one entire week. World stock markets continue to hit all the time with news that Greece is working on bailout terms.
Yaris Varoufakis tweeted this week that he welcomed “hatred” from the Eurozone partners, calling him “amateur” and “time waster”. He was demoted from chief co-ordinator for foreign minister Euclid Tsakalotos, which was bullish for european markets.
Gold regained lost dollars against the dollar and the euro after last week’s 2,8% drop, which was its most in one week since losing 21-months highs in late January.
Silver rose 4.4% to 6 session highs.
“The Greek government may [still] want to take negotiations to the wire,” The Guardian quotes an un-named Eurozone official, “but does it know where the wire is?”
An improving US economy could be bad for gold.
“If the U.S. economy or the global economy continues to improve and if the dollar continues to strengthen, I think gold prices will potentially continue to suffer,” Jimmy Lee, CEO of Wealth Consulting Group, said Friday on CNBC’s “Trading Nation.”
But it might be hard to see a sustained US economic recovery.
“If you think about the good news, the good news is that the Fed has taken a much more dovish position in recent weeks, and the Bank of China has taken a big move to the dovish side. So you’ve got dovish Fedspeak, and you’ve had bad data,” said Larry McDonald, head of U.S. macro strategy with Societe Generale.
The latest indication of the U.S. central bank’s thinking will come Wednesday, when the Fed releases its next policy statement.
“Market consensus does not expect the first rate hike to be announced at this week’s meeting, but (Fed) comments are likely going to be closely watched especially in light of Q1 GDP, which is also due to be released this Wednesday,” UBS said in a note.
Like many in the oil sector, precious metals analysts consider the price too low.
“It’s quite undervalued and we’ve had a long period of consolidation around the $1,200 mark,” said Mark O’Byrne, research director of bullion dealer GoldCore, noting that the breach of the $1,200 level spurred additional technical buying.
A sustained rally is overdue in the precious metals markets, particularly gold and silver.
