© Nik Kalsi
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I think prices for the precious metal will remain low for the near-term, and the rate hike by the Federal Reserve is definitely going to be an influencing driver. We had the FOMC statement and the outcome was as we had anticipated. The tone was on the same level and, keeping that in mind, we expect a rate hike potentially as soon as September of this year.
Furthermore, as long as the US economic data continues to come out positive enough to give the Fed and the policy makers the confidence in the overall economy, the Greenback is going to strengthen and obviously that is going to put a further downward pressure on gold prices. As a matter of fact, the precious metal is currently trading below 1,200 with a lot of the upward resistance. Moreover, I do not really see a breakage above that level any time soon. On the contrary, the downside momentum is more likely instead.
A weaker US Dollar helped to push gold prices higher, although the outlook for the precious metal remains weak in the future. What other factors may influence gold performance in the nearest future?
Some of the factors will be the fundamentals dominating the headlines at the moment. I see Greece being the key factor, as we move towards the end of this month. Greece already missed the previous deadline to make the debt payment back on June the 5. Therefore, they are now in a pond of payments with about 1.3 billion Euros to be paid on June the 30. In case any issues occur around their debt or in case of their default, we could see some safe-haven buying, which could benefit gold in the near- term.
Among other factors we have got the Non-farm payrolls coming out on the first week of July, hence, if there will be stronger numbers than we have seen in the recent months, there is going to be a lot of optimism around the US economy, which will create further speculation of the rate hike this year. Obviously, that case is going to boost the US Dollar, pushing gold prices further down.
Meanwhile, looking around other commodity markets, I assume oil is having an imminent deal coming up between the West and Iran. Recently, the Western sanctions on Iran lead to limiting amount of oil that can be exported. The reason being is because in case of an increase of oil coming to the market, we will see prices fall. Thus, that could possibly push traders and investors to move out from the oil market to some safe-haven such as the yellow metal.
What is your forecast for gold price in the next one to three months and in the longer term?
Over the next one to three months we look at gold going to the upside, since the current trading prices are quite low. There is indeed a lot of resistance for gold at the 200-day moving average and the 50-day moving average levels. If gold will break above the 1,200 and clear the 1,213, it can try to move towards 1,239 per ounce. On the contrary, if prices will continue to experience some weakness with further falls, we see a potential support level around the 1,156 per ounce. Nevertheless, we see the gold ranging from $1,150 - $1,238 per ounce for the rest of the 2015.