Gold To Remain Below $1,300 In Q2 – Sucden Financial
Gold is likely to trade between $1,225-$1,285 range in the second quarter, unless a geopolitical event triggers additional safe-haven demand, this according to international trading firm, Sucden Financial.
“A stable demand outlook for the second quarter will shore up near term support with a trading range of $1,225-$1,285 expected to contain the majority of Q2 activity. However, given the considerable event risk on the horizon, spikes higher are likely,” Sucden said in its Quarterly Metals Report on Thursday.
“Anaemic trade growth and geopolitical risks” have defined the market so far this year, stated the report, noting remaining political risks, including French, UK and German elections, which have been driving gold in Q1.
“The rise of populism and these elections could exacerbate the already real risk of protectionist policies,” analysts wrote.
In terms of future U.S. monetary tightening, Sucden sees the Federal Reserve on track to raise rates two more times this year.
“The current implied probability favors interest rate increases towards the back end of the year. We would expect further dollar appreciation against major currencies around the time of rate increases however it could be a case of buy the rumorsell the fact fueling short term market volatility.”
Gold went through “an impressive recovery” near the tail-end of 2016 and rose again in February and successively in March and April, the report noted.
Physical demand for gold will remain subdued in Q2, largely due to India and China, but additional gold price spikes are possible amid increased geopolitical tensions.
For silver, Sucden projects prices not to be higher than $19 per ounce in Q2. “Second quarter action likely to consolidate recent gains and reaffirm near term support levels with the Q2 trading range between $17-19 per ounce,” the report said.