Standard Chartered - $1900 is a critical level for gold
(Kitco News) -Standard Chartered is looking for more upside in gold and has noted some political and flow-driven reasons for the price move higher. The London-based investment bank believes $1900/oz and then $1960/oz are key levels in the gold price and should be watched in the coming months.
Precious Metals Analyst, Suki Cooper said, " the fact that the Fed only looked at inflation as transitory helped push the gold price higher."
She added, "the ETFs have had a 50-tonne inflow. What is impressive is that the ETF inflow has been able to offset some of the weakness in Indian gold demand due to the COVID-19 pandemic.".
In regards to price levels, Cooper said "$1900 has been a critical level for the gold market. Positions were a lot heavier the last time the price was at this level this time out tactical investors are around 17% lighter and ETF holdings are 4% lighter, this bodes well for gold".
When asked how much the physical demand factors into prices Cooper said "gold markets rely on the physical demand to help support the downside but it is really investor demand that pushes gold higher.". She added, " when we saw the ETF outflows the physical demand was crucial, prices held up well as demand from India and China supported prices in and around April when prices edged to $1700/oz".
When looking at other precious metals, the global chip shortage has stalled the demand for platinum and palladium recently. Cooper said, "for palladium, there could be a hefty deficit due to industrial demand elsewhere".
As you can see from the daily palladium chart below the price has been in a decent uptrend for a while now. The market has broken through the support but the previous wave low at $2726.50/oz is next up. Beyond that, the blue shaded area at $2500/oz seems very firm with around five meaningful resistance points on it and if the price does manage to get there it could provide some support.