The price of Gold rose at the end of last week to the level of $1811 per ounce. On Friday, the quotes were trading around the resistance of $1,830, but they declined against the background of strengthening demand for the US currency.
The third quarter is traditionally weak for gold, so taking into account seasonality, at best, prices will have a consolidation period in the range of 1700-1900 Dollars per ounce. The key factor in the precious metals market remains the Fed's policy and the US Dollar. In the case of a new large-scale wave of unknown coronavirus strains, an increase in consumer demand is possible.
In the second quarter, the price of gold rose by more than 2%, while in early June the quotes exceeded the level of $ 1,900 per ounce. At the same time, since the beginning of the year, gold has lost 9%. A global downtrend is clearly visible in this dynamics. Precious metals prices are not growing, the markets are still under pressure that the Fed's rate hike may occur earlier than expected. At the same time, the returning restraint of the central bank contributes to their short-term rise. This is happening as part of the general downturn, while the US economy is gradually recovering, and protective assets are in mixed demand.
Most analysts are confident that the third quarter will be held for gold under the sign of consolidation. We will need economic data for several more months, after which the gold market will determine whether high inflation will really be a temporary phenomenon, as Central Banks believe, or will be delayed for a long time, as they fear, for example, in Saxo Bank. The bank's analysts believe that gold will be guided by the movement of the dollar, since real US bond yields will remain fairly stable in the established range. Prices will react positively to new outbreaks of coronavirus, because they limit the ability of Central Banks to raise rates, even with high inflation.
In general, the policy of Central banks and physical demand in Asia remained the main factors affecting the gold market. It is necessary to closely monitor the Fed's rhetoric in the coming months, as well as the results of the July meetings and a possible meeting of representatives of local central banks in Jackson Hole in August. But everyone is sure that decisions on changing monetary policy can be made no earlier than the Fed's September meeting.
By the end of September, Gold will be worth $1,800, according to Saxo Bank. Thus, in the third quarter, we should not expect serious dynamics in prices both in one direction and in the other. But from a fundamental point of view, much has changed, mining companies will show growth after a serious decline due to the coronavirus a year earlier. Demand will also remain in positive territory as central banks start buying gold again, and jewelry consumption is recovering at a normal pace, especially in India and China, the largest consumers of the precious metal.
In the forecast for the coming week, I assume an increase in the price of gold to the levels of 1815, 1820, 1830, 1840 and 1850 Dollars per troy ounce.