Investors and traders bet the recent $99 Gold price correction was over

The gold price opened the first full week in July to the upside, surging higher by $24.25 Wednesday morning to $1,512 per ounce. The price of gold was boosted by strong investment demand as investors and traders bet the recent $99 Gold price correction was over. Silver followed gold higher, climbing 2.9% to $34.87 per ounce. Precious metals prices rose despite gains in the U.S. dollar against the euro and versus most of America’s trading partners.

Commodities moved higher alongside the gold price with every single one of the 19 components of the Reuters/Jefferies CRB Index trading higher. Oil rose 0.8% to $96.69 per barrel following a bullish article in this weekend’s Barron’s that speculated $150 oil will be hit in the next year.

Although the gold price has slid from its $1,577.40 record high to below $1,500 in recent months, Hambro contended that it is merely a correction in the ongoing gold price bull market. ”Investment demand has been the most important driver of the bull market to date,” Hambro said, “and the key factors that have been driving investment demand – concerns about financial markets, Eurozone debt and inflation – are likely to persist for the foreseeable future.” The Blackrock fund manager also noted that “the potential for further net purchases by central banks could also be supportive” of the gold price.

As for potential headwinds for the gold price, Hambro noted that “the key threat to the gold market is an increase in real interest rates.” While he does not expect this to occur anytime soon, Hambro noted, “When real interest rates begin to rise, the opportunity cost of holding gold will encourage investors to sell the metal. At the moment, we believe the current interest rate and exchange rate environment remain bullish” for the gold price.

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