The price of Gold strengthened slightly and reached the resistance of $1810 per ounce.
The yield of US treasury securities compensates for the growth of the dollar amid fears of a threat to the prospects for a global economic recovery. The yield on key 10-year treasury bonds is holding near five-month lows, which indicates low opportunity costs of owning interest-free gold. Stocks on the stock markets fell by 2% at the beginning of the week, with the Dow announcing its worst trading day in nine months. Gold can benefit from this situation, as the asset is often used as a reliable means of saving in times of political and financial uncertainty.
Precious metals continue to perform their investment function to protect capital against the background of the falling value of other asset classes. These include, first of all, bitcoin, which was widely advertised as an alternative to gold for hedging, but has fallen sharply in price over the past couple of months. Gold looks like a much safer asset at the moment, especially when rising inflation has pushed the real interest rate even further into negative territory. Negative real rates are considered a positive moment for Gold.
The demand for the asset from Central Banks is also growing. In June, Brazil increased its gold and foreign exchange reserves by about 42 tons. Thailand, Hungary, India and Kazakhstan were also buyers. There are suggestions that Russia may return to the club of Gold buyers, given the recovery in oil and gas prices. Thus, the prospects for the precious metals market remain positive despite the recent fall in prices.
In the forecast, Gold is expected to grow to the levels of 1815, 1820 and 1830 dollars per ounce.