(Kitco News) – Growing hope that the global economy will experience a sharp recovery after it was devastated by the COVID-19 pandemic will impact gold prices, but one research firm noted that there is still enough uncertainty to support gold prices through the rest of the year.

The $1,700 level continues to prove to be a formidable support level as prices have managed to regain some of the lost ground after Friday’s nearly 3% drop.

Although gold has struggled to find momentum, caught in a fairly tight range for the last two months, analysts at DailyFX.com said that the prices still have a long way to go before the current uptrend is put at risks.

In their technical outlook as part of the firm’s second-quarter gold report, published Monday, the analysts said that they remain bullish on gold as long as prices hold above long-term support above $1,500 an ounce.

“Failure up around $1,733 would risk a larger correction heading deeper into Q2 – that said, the broader outlook remains constructive while above $1,522, with a breach/close higher targeting subsequent topside objectives at fresh multi-year highs,” the analysts said.

Looking at the top side, the analysts said that prices have to push above critical resistance at $1,795 before it can look at making a move back to all-time highs

Looking at the fundamentals, the analysts said that the market could still be susceptible to some selling pressure in the near-term as the economic impact of the coronavirus has peaked.

The analysts noted that it’s still unclear what kind of activity the global economy will see through the rest of the year. They said that the threat of a prolonged recovery remains. The comments come after the U.S. government said in Friday that 2.5 million jobs were created in May, significantly beat expectations.

“The threat of a protracted recovery may become more evident if the social distancing rules stay in place throughout 2020,” the analysts said in their report.

Despite the near-term challenges, DailyFX continues to expect the precious metal will remain in a uptrend.

“The price of gold may continue to exhibit a bullish bias through the remainder of the second quarter as the COVID-19 pandemic saps investor confidence, and fears of a protracted recovery may heighten the appeal of the precious metal especially as major central banks push monetary policy into uncharted territory,” the analysts said.

Author: Neils Christensen

Source: Kitco: Gold price uptrend is a long way from being threatened – DailyFX

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