Gold prices rose by 1% on Friday, caused by the fact that investors has recognized Fed’s lack of confidence regarding early rate hike. Many traders close gold short positions, causing gold to soar back.
Currently gold prices are falling, reaching $1,198.86/oz.
Gold price is likely to rise because of the following reasons:
- Market may not expect the Fed to raise rate after consecutive dovish messages and presidents’ contracting views over rate hike
- Gold prices dropped sharply in Europe, showing a large amount of gold is sold from there. It is likely that gold was sold by the Greek government to repay debt to the IMF. That amount of gold will be bought by the U.S. later, as Fed is increasing its gold reserves.
However, gold price may decline because of the following reasons:
- June’s rate hike may put downward pressure on gold price.
- China’s weak trade balance raises concerns about gold demand in the world’s second largest gold consumer.
- Difficulties of Indian farmers also reduced the demand for gold in major gold consuming market.
Forecasting: Prices may rise to $1,223.65