Currently, gold is traded at $ 1,186.03/ounce.
Today, gold prices may go up because of the following factors:
- China’s PMI services index hit 53.2, lower than the date 53.4 of April. In addition, a survey focusing on small and medium sized enterprises shows that manufacturing activities continued slow for 3rd month, mainly due to falling export orders. This is a sign that the leading gold consumer are experiencing difficulties even though the government lowered interest rates 3 times in the last 6 months.
- Interest rate outlook: In the two most recent FOMC meetings, the US central bank have stated that any decision will depend on the data. Federal Reserve Board deferred the “normalization” of interest rates is good news for gold prices.
- Negotiations between Greece and international creditors still faces deadlock, the two sides began blame each other. Meanwhile, only a few days left until the Greek’s debt reach maturity. If no agreement is reached in time, Greece at risk of “default” and leave the Eurozone. Amid political turmoil, many investors will turn to gold.
- Today, many European countries simultaneously published PMI data. Data from Spain and Italy was better than expected, however this index in Germany was only 51.1, down from 51.4 of the previous month. Overall, the data was not encouraging which means European countries are still struggling to find momentum after the financial crisis. Gold may find support from the discouraging news.
However, gold may continues to plunge due to the following reasons:
- According to statistics from the CFTC, gold bullish speculations fell to 10.239 last week, this trend may still be ongoing this week.
- According to research by ANZ, last week, dollar net long position on the futures market of funds reached r3.7 billion dollars to 21.5 billion dollars. The dollar was strengthened recently, creating downward pressure on gold.
- In Asia, demand for precious metals has dimmed when consumers from the two biggest markets have backed off. India’s wedding season and the festive season are over, making jewelery demand declined. In China, the stock market is edging up dramatically, which will dampen gold appeal.
Forecasting: Gold price today may rise to $1,210.13/ounce.