Gold Bulls 'Have Very Little Reason To Worry' - ThinkMarkets
(Kitco News) - Despite some normal fluctuations in gold prices this week, bulls “have very little reason to worry,” as long as the metal continues to trend upwards, said online brokerage company ThinkMarkets.
The yellow metal saw declines on Tuesday amid positive U.S. macro data. The August Comex gold futures last traded at $1,411.20, down 0.16% on the day following news that U.S. retail sales rose 0.4% in June.
“Some stronger U.S. economic data gave the monetary policy doves some pause on their notions of several interest rate cuts in the coming months,” said Kitco’s senior technical analyst Jim Wyckoff.
Chinese economic data is also weighing on gold this week, noted ThinkMarket’s chief market analyst Naeem Aslam.
“The People Bank of China has been providing its full support for the economy and this backing has saved the day for China … The factory output and retail sales numbers have beaten estimates and this has brought some risk on appetite among investors,” Aslam wrote on Monday.
Yet, gold bulls should not despair, according to ThinkMarkets.
“The price is still looking solid,” Aslam wrote on Tuesday. “The price is trading above the 50-day, 100-day and 200-day moving averages. This confirms that the price is trading in an uptrend and as long as the price stays above this, bulls have very little reason to worry about anything.”
The precious metal is still trading near six-year highs on dovish Federal Reserve expectations, which are unlikely to change significantly in the near-term.
“The Fed is under pressure to cut the interest rate this year in order to support inflation and this means weaker dollar,” Aslam said. “Geopolitical tensions are still high. France, Germany and the UK have increased pressure on Iran to act responsively in relation to its commitment (made back in 2015 about the international nuclear agreement).”