By David Brough
Gold prices, which rallied this week due to the yellow metal’s “safe haven” appeal after gloomy projections about the U.S. economy from the Federal Reserve and on concerns over rising cases of Covid-19 in the United States, appear set to move sideways to lower in the short term, according to consultancy CPM Group.
In a video address on June 12, CPM Group managing director Jeffrey Christian said gold was likely to correct lower after the latest rally during a period of volatile share markets.
“We’re looking for gold to trade sideways to somewhat lower over the next months,” Christian said.
He saw $1,720 per ounce as the first objective on the downside.
Gold could move in the next few months between, say, $1,800 per ounce on the high side to $1,650 or even $1,600 on the downside, Christian said.
Gold was up 0.09 percent at $1,729.44 per ounce in late trade on June 12.
Gold prices jumped this week on renewed pessimism about the U.S. economic outlook, coinciding with a tumble of U.S. equities on June 11 as negative sentiment dug in due to increasing cases of the novel coronavirus in the United States.
Capital Economics has predicted a gold price of $1,600 per ounce by the end of 2020, as fears of a spike in inflation as a result of central bank stimulus are seen as exaggerated in the short to medium term.
“Despite fears of runaway prices, we think that stimulus-fuelled inflation is unlikely in the short or medium term. With interest rates set to remain historically low, we expect the gold price will come under pressure from fading safe-haven demand, falling to $1,600 per ounce by year-end,” it said.
Disclaimer: Any opinions expressed in this article are solely those of the author and should not be seen as investment advice.