Gold price ends week with a knockout, what’s next?
Gold price ends week with a knockout, what’s next? by Anna Golubova for KitCo News
Gold surprised with a rally Friday with precious metals analysts not ruling out more price gains next week as they keep a close eye on the economic data, COVID-19 reinfection rates, and geopolitical tensions.
The yellow metal rallied nearly 1.5% on the day on Friday with August Comex gold futures last trading at $1,756.20 an ounce.
Analysts were keen to see gold break above the $1,750 an ounce mark, which is a strong resistance level for the bulls. Whether gold can hold above it will be the key question for next week.
“The market looks stuck in a range, gold needs to get above the $1,740 level. If it does, we can have a good rally,” Afshin Nabavi, senior vice president at precious metals trader MKS SA, told Kitco News on Friday. “Wouldn’t be surprised if we see higher end of the range [due to] economical tensions thanks to COVID aftermath and tensions between the U.S. and China … Eventually, we should be heading to $1,800 or even higher before the end of the year.”
Downbeat comments from the Federal Reserve official prompted increased safe-haven demand on Friday as Boston Federal Reserve President Eric Rosengren salted that a possible second coronavirus wave could prolong economic shutdowns and disrupt the economic rebound.
“So far, in the United States, efforts to contain the virus have not been particularly successful,” Rosengren said during a virtual event organized by the Greater Providence Chamber of Commerce. “This lack of containment could ultimately lead to a need for more prolonged shut-downs, which result in reduced consumption and investment, and higher unemployment..”
EU leaders also disappointed the markets on Friday, saying that even though urgent action was needed to help Europe recover from the coronavirus shutdowns, they were not ready to sign off on a massive stimulus plan that has been debated over for weeks.
Geopolitics heating up
An important driver next week will remain the U.S.-China tensions, according to analysts. “The big thing I am watching for is tensions with China, the worse it will get the more investors will flock to safe haven,” said Everett Millman, precious metals expert at Gainesville Coins.
After what seemed like more or less successful talks in Hawaii on Wednesday between the top officials from the U.S. and China, U.S. President Donald Trump has renewed his threat to cut ties with China.