Outlook on Gold by Mr. Abhishek Bansal, Abans Group
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Below are Outlook on Gold By Mr. Abhishek Bansal, Founder Chairman, Abans Group.
Gold prices likely to trade firm
Gold prices are currently sustaining near $1807 with moderate gains from the previous session is likely to remain firm however it is likely to get fresh direction from the US Consumer prices index report later today and Fed Chairman Jerome Powell's testimony before Congress on Wednesday. Gold is also getting support from lower global bond yields after dovish central banks' comments.
Meanwhile, strength in the dollar index is limiting positive move in gold prices. The dollar index has been recovering from the recent low of 89.515 registered on May 25th and sustaining above 92 from the last several trading sessions.
Dovish central bank comments are likely to keep gold prices firm. Richmond Fed President Barkin said inflation could cool more than expected and that the US labor market "hasn't healed enough" for the Fed to taper bond buying. Also, New York Fed President Williams said, "clearly, right now, we have not achieved substantial further progress" on employment and inflation to begin tapering asset purchases.
ECB President Lagarde said the July 22 ECB meeting will have "some interesting variations and changes" and that the ECB's emergency stimulus that will end in March 2022 could "transition into a new format."
On the economic data front, the German May wholesale price index rose +10.7%y/y, the largest increase in 39-1/2 years. Also, Japan Jun PPI rose +0.6% m/m and +5.0% y/y, stronger than expectations of +0.5% m/m and +4.8% y/y.
According to the CFTC Commitments of Traders report for the week ended July 6. the net long for gold futures increased by 20595 contracts to 182821 for the week. Speculative long position added by 16339 contracts, while shorts dropped by 4256 contracts.
Gold prices are likely to trade firm while above the key support level of $1782-$1774 meanwhile immediate resistance level is seen around $1822-$1834
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