On Monday, gold fell to the lowest in 15 months, forcing investors to speculate on the prospects for the near future, as the metal is now trading near key technical levels.
Report data on employment outside the United States manufacturing sector, which exceeded expectations, was the impetus for the growth of the dollar and the decline in demand for gold as a safe asset (the price dropped to $ 1,183.46).
A break below the key support level at $ 1,180 would mean further losses for the gold, I’m sure Chris Weston, chief market strategist at IG. In the past year the price of gold fell to $ 1,180 twice in the second and fourth quarter, but later recovered in both cases.
“If there is a break of $ 1,180 before the end of the year, we ramp up to the $ 1,100,” – said in an interview with Weston for CNBC. “Today is a very unfavorable situation for gold. Inflation expectations in the United States, Europe and Japan – are falling. There is no reason to hedge. “
Gold has lost 9% over the last 6 months, despite the fact that the geopolitical tensions and Eastern Europe and the Middle East have traditionally contributed to the fact that investors used to hedge by buying precious metal.
In contrast, low inflation and a stronger dollar reduced the appeal of the metal. A strong dollar negatively affects the demand for gold, as it makes it more expensive for holders of other currencies.
Andrew Su, CEO of Compass Global Markets, «aggressively buying up” gold at current levels, sees brighter prospects for the precious metal.
“Gold has become oversold at these levels. I think it’s overreaction to the stronger dollar, “- he said. Sooner or later the dollar will weaken, sure Su, who expects the Fed chief Janet Yellen soon dissuade investors that prior to the first rate hike should go “quite a long time.”
“I think it happens a recovery that will be caused by the closing of short positions,” – he said, predicting that gold will rise to $ 1,250- $ 1,300 by the end of the year.