Gold: scenario for the week
By Sergey Ruban
Gold price reached the 5-week minimum after the report on the physical demand for gold in China and the US labor market data.
The recent advance in the gold price has been associated with an increase in demand for the safe-haven asset amid the tensions in the Eastern Europe and the Middle East. However, these factors are not enough to support the uptrend in a situation where the US plans to increase the interest rates.
Jobless claims in the US fell to the lowest level since 2006 of 284,000. Investors are worried that American labor market recovery will make the Federal Reserve to taper stimulus and start increasing the interest rates earlier than expected. In this case gold will be deprived of support.
China’s Gold Miners Association reported the demand for gold in China fell in the period from January to June. The demand for the gold bullion fell by 62% while the demand for the gold coins fell by 44%.
As a result of such news gold tested levels below $1300.00 dollars per ounce.
The bears are trying to break below the strong support at $1280.00/1300.00. In case of a success and a subsequent sustainable consolidation below $1280.00, the pair will slide to the levels around $1240.00 and $1200.00.
If the support $1300.00/1280.00 holds, the pair will rise to $1345.00, which will open the way to overcome the upward trend in the direction to the resistance levels of $1392.00 and $1433.00.