We have seen that the gold price was higher. We have reached the first major technical level at $1240 an ounce. It has reached a level of $1250 an ounce. It represents 50% of the price correction we have seen throughout May. Probably we will see consolidation soon. We saw that the dollar weakens, it supports this decision. We have also seen that the expectations about increased US interest rates are disposed of. These events are going to hand investors in gold. We were able to see investors’ numbers of its position in futures and hedge funds. It continued with the purchase of gold that is traded on the stock exchange. It could indicate that investors who trade on the longer term concerns about the fact that we have billions of dollars of sovereign debt traded with negative yields. They were basically forced to seek alternatives. However, the jump price of gold is probably started by hedge funds. In the last three weeks, they have reduced their long relationship in respect of short positions by one-third. According to US authorities, that helped to cause the reaction by funds. They have struggled to rebuild the number of long positions after the change of feeling in the report.
So what do we have now? Well, as I mentioned, we probably have a consolidation. If we look at the charts, we reach a level of technical correction, it could mean that we could see the market consolidate some of the gains that we have seen. We expect the support of between $1225 and $1230 an ounce. If it exceeds 1250, then the market will really begin to discuss whether we could see a new record in the near future. The price of gold continued to be lowered and approached the monthly minimum. But despite the price is still moving near the highest level since March 2014. Demand for this precious metal continues to maintain an expansionary monetary policy of cheap money was applied by the biggest central banks.
Since in September 2011 the price of gold reached its maximum to date has fallen about 36%. But last year, despite the occasional price fluctuations stabilized above $1140 dollars per ounce. Current price move above $ 1350 an ounce and the fourth week in a slight increase. Will the price of gold will increase due to the situation in the UK? Or fall to the tightening of monetary policy and the Federal Reserve raising interest rates? Why the recent fall of the dollar has caused stronger growth rates of the precious metal?
The current situation in the financial markets and the global economy is far from stable. The bulk of Greek debt is currently owned by the IMF, the ECB, and the European Union. It becomes primarily a political problem. On the other hand, what we may currently have more influence on the movement of prices of the precious metal is the Federal Reserve’s monetary policy. The policy of cheap money is nearing completion. After completion of the program of monetary easing, is expected shortly an increase in interest rates. It certainly does not favor the growth of the gold price in the market. Investors invest in periods of instability and crisis. However, when the Federal Reserve really decide on this step it is still uncertain. According to a recent statement by the US central bank, although the unemployment rate and inflation close to target values, general economic conditions in the US could be for some time to postpone to raise the interest rate.
The gold price in afternoon trading rose to $1375 an ounce, the highest level since 17th March 2014. Gold is once again the center of attention. While our leaders in the UK continue to squabble among themselves, the pound slipping lower and lower. It affects the euro and a variety of other markets and generally contributes to creating an atmosphere of anxiety and uncertainty. The surprising results of a British referendum caused the fall of the pound to a record low level and carried out the pressure on global markets. Among the most traded commodity in the world is the gold. The volume of traffic occupies the third place among all financial instruments with 9.12%. Gold is considered a low-risk investment. It is preferred by many investors. In recent years, commodity futures trading recorded increased demand, including those with the most gold.
The market was completely unprepared for this surprising outcome of the referendum in the UK. Among the main winners of this situation is gold. This precious metal is a safe haven Sterling prices have fallen 15%, 10% versus the euro and dollar versus 5%. We pushed the price of gold of $ 1300 an ounce and now we potentially could go towards $1400 an ounce. After the initial phase of the lowest prices probably will reach consolidation. We expect the support between USD 1300 and 1315 an ounce. It could potentially take him to the highest value of 2014 from the US $ 1,400 an ounce. Gold slipped but remained close to the highest level during the year. The US dollar is under pressure because of the recent decision of the Federal Reserve to reduce the pace of interest rate increases during 2016. The dollar has been under pressure since the Fed has not changed its monetary policy and decided to reduce the pace of raising interest rates twice this year, not four, as initially planned. Traders and investors are cautions and concern about slowdown of global economy. Investing in gold could be solution.
The Federal Reserve reported that the US economy faces risks due to uncertainty about the global economy. Recorded moderate economic growth and strengthening of the labor market. It could enable tightening of monetary policy during this year. Gold prices rose by about 35% since the beginning of the year. Investors have higher demand as safe investments because of instability in financial markets and concerns about a slowdown in China.