Gold Price Forecast: Sellers Will Take Advantage of Limited Gains

The dollar has continued to show signs of losing momentum against European currencies, which will limit the scope for gold selling unless there is an extremely strong U.S. CPI release and pressure for the Fed to accelerate monetary tightening. Gains are still likely to attract selling interest quickly with no evidence yet of a sustained recovery.

Gold declined to fresh 11-month lows at the beginning of the week before correcting higher as the dollar lost overall traction. There was, however, selling interest above $1,260 per ounce and consolidation around $1,255 at Friday’s European close. Stabilization in the Chinese yuan helped underpin risk sentiment, and gold tended to benefit as the dollar lost support. U.S. currency trends will continue to be a key market focus during the week and will inevitably have an important impact on gold.

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