Gold Price Analysis: XAU/USD looking to the $1,800s behind highest futures finish since 2011

2020-07-01 01:19 (GMT+)
  • Gold futures topped $1,800 an ounce to mark their highest finish since 2011.
  • USD could face a coronavirus wave of its own.

The price of XAU/USD is trading at $1,781.17 at the time of writing, virtually flat on the day so far, sticking to a tight range between the low of $1,780 and the high of $1,784. 

Overnight, on Tuesday's US session, gold futures topped $1,800 an ounce to mark their highest finish since 2011. August gold rose $19.30, or 1.1%, to settle at $1,800.50 an ounce. 

That was the highest finish for a most-active contract since Sept. 2011. Bulls will cast minds back to August 2011, when gold futures settled at a record $1,891.90.

The uncertainty pertaining to the coronavirus pandemic is attracting flows into the metal’s safe-haven appeal.

However, "as risk appetite continues to firm, the allure for precious metals is fading in the eyes of safe-haven buyers", analysts at TD Securities explained. 

Gold prices are at risk as further downside below $1690/oz could catalyze CTA liquidations that may have an outsized impact as a result of the scarce liquidity environment,

the analysts argued. 

When the dust settles, we continue to expect gold prices to rally as capital seeks shelter from a prolonged period of negative real rates. On the other hand, the recovery in commodity demand, combined with rising investment flows in precious metals has created the set-up for explosive performance in silver, which suggests this metal may continue to display relative strength against gold.

USD to face a coronavirus wave of its own

On the other hand, the rising numbers of new cases of COVID-19 in Florida, Texas, California and Arizona have raised concerns about the potential shape of the economic recovery for the US.

Subsequently, there are doubts as to whether the USD can remain bid, especially if the problem is unique to the US. 

DXY: Bears looking to bearish wedge breakout, encouraged by COVID-19 second wave

A second outbreak of the coronavirus could force governments and people to withdraw from the economic activity, Jerome Powell, Chairman of the Federal Reserve System, said on Tuesday.

"The path of the economy is highly uncertain," Powell added while testifying before House Financial Services Committee.

US coronavirus cases rose by over 40,000 for a 5th time in past 6 days

Gold levels


Tag : Gold | DollarIndex | Coronavirus

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