Gold Price Outlook: Bearish Trend Still in Place
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Gold price, news and analysis:
- The price of gold continues to fall and could yet ease further.
- The US Dollar is firm, safe havens are currently being shunned by investors and physical gold demand is weak.
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Gold price outlook poor
The price of gold remains in the downward trend in place since mid-April and could yet ease to the $1,200 per ounce level.
It has been hit by the advance in the US Dollar, which has seen the currency’s value against a basket of currencies (DXY) climb from a low of 87.93 on February 15 to above 94 currently. Moreover, likely decisions by the Bank of England to raise UK interest rates this week and the US Federal Reserve to increase them in September are making zero-yielding gold unattractive.
Sentiment in the markets also remains positive, reducing demand for safe havens such as gold, and if Friday’s US non-farm payrolls data make a September hike by the Fed even more likely gold can be expected to drop further.
Gold Price Chart, Daily Timeframe (April 1 – July 30, 2018)
Gold demand weak
The World Gold Council noted earlier this month that that three factors have likely held gold back: a strengthening US Dollar, higher investor threshold for headline risk, and soft physical gold demand.
Moreover, Friday’s Commitments of Traders report by the US Commodity Futures Trading Commission showed another week of large speculators reducing their net-long positons. At nearly 49,000 contracts, net-long positions areat their lowest in more than a year. Large speculators have not been net-short since 2002.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.