Gold price has room to move lower, watch $1,655 – analysts

Kitco News

(Kitco News) — The gold market is starting the week, holding critical support at $1,700 an ounce. Still, some market analysts warn investors that prices could be heading lower in the near-term as market sentiment is shifting.

Gold prices are trying to start the week on a positive note after seeing last week’s most significant loss since early March. In a relatively quiet Asian trading session, June gold futures last traded at $1,704.60 an ounce, up 0.22% on the day.

However, some analysts are warning that investors should keep an eye on the downside as prices could test support around $1,650 an ounce in the near-term.

Ole Hansen, head of commodity strategy at Saxo Bank, said in his weekly report that headlines about countries starting to ease their lockdown restrictions are creating some optimism in financial markets that are weighing on gold prices. He added that there are growing expectations that the global economy will see a V-shape recovery from the worst downturn this century.

Hansen said that this shift in momentum could push gold prices to test near-term support at $1,655 and then at $1,634. However, he added that he is looking past the near-term downtrend.

“We view the road to recovery unfortunately as being anything but V-shaped. While the short-term technical outlook for gold has deteriorated, the long-term fundamentals have not,” he said.

Marc Chandler, chief market strategist at Bannockburn Global Forex, noted in a report Sunday that gold has been consolidating in a wide range of $50 either side of $1,700 an ounce.

“The MACD and the Slow Stochastic warn of the downside risk,” he said.

David Song, market strategist at DailyFX.com, said that gold appears to be taking a breather as central banks start to reign in their unprecedented emergency measures to support the faltering economy.

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Source: Neils Christensen | Kitco News

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