The price of gold has just struck a 6-year high, having gained 9% so far in June. While bullish sentiment maybe a contrarian signal for a short-term pullback, we think gold has a lot further to go. We have moved our medium-term target for gold to $1680 per oz. It would take a fall below $1300 for us to reconsider.

Short term market dynamics have been working in favour of a rising gold price. The primary features are a weak dollar ahead of likely Fed rate cuts, narrowing US/RoW yield spreads and rising geopolitical tensions between the US & Iran.

Gains in gold extended on Tuesday when the Iranian foreign ministry, in response to the fresh sanctions imposed by President Trump, said the US-Iran diplomatic path is closed “forever”. Forever is a long time! But it seems tensions between the US and Iran will remain high for a while, underpinning gold as well as oil prices.

The biggest near-term risk event for gold is Fed speak later today. Federal Reserve policymakers Bostic and Chair Powell speak at 17:00 and 18:00 BST respectively. Jay Powell is scheduled to speak to the influential Council on Foreign Relations about the economic outlook and monetary policy.

Markets have now fully priced in a rate cut at the July meeting and we think a rate cut in July is a done deal. It is now up to Mr Powell to manage these market expectations. Central banks have clearly made a dovish pivot and we don’t think he will undermine that. More talk of doing what is ‘appropriate to sustain the expansion’ seems likely. We do think he will try to dispel the idea of a 50 basis point cut in July. That could give the dollar some respite, and see gold pull back short term before the G20 summit.

US Opening Calls

Dow Jones to open 2 points higher at 26,729

S&P 500 to open 2 points lower at 2943

This information has been prepared by London Capital Group Ltd (LCG). The material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. LCG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. Spread betting and CFD trading carry a high level of risk to your capital and can result in losses that exceed your initial deposit. They may not be suitable for everyone, so please ensure that you fully understand the risks involved.

Analysis feed

Latest Forex Analysis

Editors’ Picks

EUR/USD remains depressed but off daily lows

The EUR/USD pair is recovering from a daily low of 1.1216, although holding in negative territory for the day. US preliminary Michigan Consumer Sentiment Index improved by less-than-anticipated in July, coming in at 98.4 vs. the 98.5 expected.

EUR/USD News

GBP/USD trading marginally lower daily basis but above 1.2500

The Pound gave back some of its Thursday’s gain on dollar’s relief. The GBP/USD pair broke a daily descendant trend line coming from June’s high and holds above it, leaving little room for sellers to act.

GBP/USD News

USD/JPY: bears pausing, still in control

Japanese National Inflation steady at 0.7%YoY in June. US Michigan Consumer Sentiment Index expected at 98.5 in July. USD/JPY corrective advance falling short of signaling an interim bottom in place.

USD/JPY News

Something has spooked the Fed

We wish we knew what it is. Wild talk of the US joining Japan and Europe with zero or negative return on the 10-year is or should be very frightening.

Read more

Gold consolidates around $ 1440, eyes US data for fresh direction

Gold (futures on Comex) extends its side-trend around the 1440 mark into the mid-European session, having stalled its retreat from 2019 highs of 1454 near 1437 region.

Gold News

Majors

Cryptocurrencies

Signatures