Quote and Outlook on Gold By Mr. Abhishek Bansal, Abans Group
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Below are Quote and Outlook on Gold By Mr. Abhishek Bansal, Founder Chairman, Abans Group.
Strength in the dollar index to keep gold prices under pressure
Gold prices traded negative as the dollar index found safe-haven support from growing concern that more countries will need to re-impose pandemic lockdowns as the dangerous Delta Covid-19 variant spreads throughout the world. Gold is currently trading near $1759 which is sharply lower than the recent high of $1919.20 registered on June 1st. Meanwhile, the US dollar index currently trading above 92.0 which is sharply higher from the recent low of 89.53 registered on May 25th.
Additionally, Hawkish comments from global central banks are likely to keep gold prices under pressure. The Federal Reserve Bank of Richmond President Barkin said if the US labor market can get "significantly further along," I'd be ready to start to taper asset purchases. Also, Minneapolis Fed President Kashkari said the US economy is positioned for a "very strong" recovery. ECB Vice President Guindos said the ECB expects “inflation in the medium-term to remain below our aim,” which fueled speculation the ECB might maintain its euro-negative stimulus measures.
Covid infection numbers have supported safe-haven gold prices however, the 7-day average of new US Covid infections last Wednesday fell to a new 15-month low of 11,351. However, the Japanese government is likely to extend pandemic restrictions in Tokyo and other areas by 2 to 4 weeks beyond July 11, when they were set to expire.
On global economic data released yesterday, were mostly mixed for gold prices. Japan May retail sales of -0.4% m/m and +8.2% y/y against expectations of -0.7% m/m and +8.1% y/y. The Japan May jobless rate rose +0.2 to a 5-month high of 3.0%, against expectations of 2.9%. The June Eurozone economic confidence index rose +3.4 to a 21-year high of 117.9 against expectations of 116.5. Also, the June French consumer confidence indicator rose +4 to a 15-month high of 102, against expectations of 100. German Jun CPI (EU harmonized) index rose +0.4% m/m and +2.1% y/y, against than expectations of +0.3% m/m and +2.1% y/y. The US Apr CoreLogic composite-20 home price index rose +14.9% y/y, against expectations of +14.7% y/y and the biggest increase in more than 15 years. Also, the Conference Board US Jun consumer confidence index rose +7.3 to a 16-month high of 127.3, against expectations of 119.0.
According to the CFTC Commitments of Traders report for the week ended June 22 net long for gold futures dropped by 25822 contracts to 166214 for the week. Speculative long position dropped by 20794 contracts, while shorts added by 5028 contracts.
Gold prices are likely to continue a negative trend while below the key resistance level of $1793-$1803 while an immediate support level could be seen near $1735-$1720
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