Gold Bulls Fight To Hold The Line On Friday
We’re on the 5th day of the week and gold prices continue to hold around $1,800. But will it be able to stay that way? The price of gold started the week around $1,787 and swiftly climbed to new 2020 highs of $1,829.80 by Wednesday.
However, like the last time gold made historic highs, it consolidated after. How far as gold dropped during the second half of the week? On Friday, the precious metal’s price dropped below $1,798. Most expect the price of gold to maintain its presence near record highs for the year. The biggest question is how will investors weigh out the growing COVID cases against an economic turnaround?
Better said than done. Officials and staff economists at the Fed caution that a second wave of recession could sweep over the country later this year. That’s if the coronavirus pandemic isn’t controlled, according to a summary of the Fed’s policy meeting held on June 9-10.
‘Participants stressed that measures taken in the areas of health-care policy and fiscal policy, together with actions by households and businesses, would shape the prospects for a prompt and timely return of the U.S. economy to more normal conditions,” the summary said.
[Read More] Can Gold Prices Hold Above $1,800 In July?
But then you have optimism in mainland Chinese stocks. It spurred equities to multiyear highs in recent days, with the Shanghai Composite rising 16.5% in eight straight sessions through Thursday. Those increases were partly fueled by optimism among China’s millions of individual investors, who dominate trading. Heading into Friday’s lunch-hour, gold prices jumped back above $1,800.
Analysts Remain Bullish On Gold
A scenario in which the U.S. is hit by a second wave of coronavirus cases, while China recovers strongly is “ideal for gold.” That’s according to GoldmanSachs in a note. The team said it now has “even greater conviction” in its bullish 12-month target for the precious metal.
“Go long copper, silver, and steel and stay long gold,” was their advice for investors, favoring copper as the most exposed commodity to the investment-driven Chinese recovery. Silver stands to benefit from ongoing demand among investors for safe-haven assets, as well as the Chinese industrial recovery, they said.
Meanwhile, other firms directly addressed the recent dip in gold prices. “We regard the decline in gold and silver prices to be a healthy correction following their previous steep rise,” Commerzbank said. “We do not expect any prolonged correction, as the general situation is clearly favorable for gold and silver.”
Meanwhile, major gold ETFs are still trying to figure out their own directional moves. VanEck Junior Gold Miners(GDXJ Report), VanEck Gold Miners(GDX Report), Granitshares Gold Trust (BAR Report), and SPDR Gold Trust (GLD Report) have all hit the reset button it would seem. All four have retreated from their 2020 highs but are holding gains for the week.
However, that doesn’t mean there haven’t been gold stocks that continued to push higher. Harmony Gold (HMY Stock Report) for instance, made another new 52-week high on Friday. The gold stock hit $5.97 making it the 6th consecutive new 52-week high this week. Galiano Gold (GAU Stock Report) also reached another 52-week high on July 10th. Shares of GAU stock jumped to early highs of $1.78 further extending a 200%+ move since March.
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