According to TD Securities, after a near one-year low in June, gold prices are expected to recover and continue to rise in the remaining months of the summer. The lack of “fuel” in the iterative trade war and the weakening of the dollar are factors that support the price of gold.
TD Securities Global Strategy Director Bart Melek wrote in a report released on Monday (July 9): “The price of gold is expected to exceed $1,270 per ounce in the summer. In fact, if the price of gold rises in the last three months of 2018 We are not surprised by $1300/oz.”
Melek pointed out that gold has started to recover last week, and COMEX August gold futures rose from $1,240 per ounce to around $1,260 per ounce.
Melek wrote: “The weaker dollar, lack of interest in risky assets and the decline in long-term bond yields were key factors in the rise in gold prices last week. The bond yield curve was further flattened, which triggered a possible end to the current US economic expansion. Guessing and worrying, this is another important reason why gold prices have performed relatively well in recent days.”
The report emphasizes that in the short term, some market speculators may recover their hawkish prospects on the issue of the Federal Reserve’s (FED) tightening of monetary policy, which will benefit the gold price.
Melek added that the strength of emerging market currencies will also play a key role in boosting gold prices this summer.
At the same time, Melek expects that as the European Central Bank (ECB) prepares to raise interest rates, the dollar’s gains will fall back, which is another good sign of gold.
Daniel Ghali, a commodities strategist at TD Securities, pointed out that investors may turn their attention to macroeconomic data as the trade war between China and the US has not been seriously upgraded this week.
Ghali writes: “US inflation data may become the focus of precious metals traders, CPI and PPI will be released this week. But in addition to macro data, with US President Trump visiting Europe, market participants may also pay attention to NATO Summit.”
Ghali explained: “Given the recent stock market unease and the resurgence of global economic growth that will be driven by trade, traders may interpret inflation weakness as a sign that the Fed may still abandon radical interest rate increases.”
This week, investors will usher in some heavy data, the most important of which will be the US Consumer Price Index (CPI) on Thursday.
Analysts pointed out that if consumer inflation data continues to maintain current trends or accelerate, then the dollar may be rebound, as the possibility of another rate hike in 2018 will rise further. However, if the CPI and the last Friday’s wage data echo and fall back, it may lead to the suppression of the dollar, which will benefit the gold price.