Further equity losses could push gold prices higher - Commerzbank
(Kitco News) - The gold market continues to trend water as prices trade in a relatively narrow trading range; however, analysts at Commerzbank said that volatility in equity markets could provide some much-needed buying momentum for the precious metal.
In a report Wednesday, the analysts said that gold prices managed to bounce off critical support as U.S. equity markets, particularly the stellar tech sector, sold off sharply. Since hitting a rector high above 12,000 points last week, the Nasdaq composite has lost more than 10%.
The commodity analysts noted that the risk aversion sentiment and higher volatility also pushed the U.S. dollar higher, which limited gold’s rally. Ahead of Wednesday’s North American equity open gold prices are seeing modest losses. December gold futures last traded at $1,935.70 an ounce, down 0.39% on the day.
“[Tuesday’s] movement of the gold price makes it clear that price falls still generate buying interest among ETF investors rather than prompting selling,” the analysts said. “The gold ETFs tracked by Bloomberg registered inflows of 3.5 tons yesterday. This was the tenth consecutive day of inflows, even if they are no longer on the same scale as in July.”