Gold: ‘a downside break of the $1,180-1,220 per ounce range looks imminent’ – ANZ

FXStreet (Mumbai) – Gold lacks direction at present but could break lower to test $1,100 in the very near term, ANZ said

“The right signals might be just around the corner,” the bank said in a note on Thursday. “To us, a downside break of the $1,180-1,220 per ounce range looks imminent.”

The US Federal Reserve is on course to raise interest rates this year or early in 2016, which would raise the opportunity cost of holding gold and push investors into more yield-bearing assets.

“For this reason we have viewed gold prices negatively, and continue to do so,” ANZ added.

“We still expect gold to test $1,100 per ounce in the short term, and it looks like the way things are evolving, gold may be due for another crack at it.”

Gold has not traded below $1,100 since March 2010.

“China’s onshore stocks have built up once more, and should see import demand pull back and the Shanghai Gold Exchange trade in line with the international price [no/weak premium],” it added.

“While some of the surplus is due to higher gold lending volumes, which will eventually be drawn down, and higher pipeline stocks, the softness in retail gold demand over the past few quarters is a little concerning,” ANZ concluded.

The US Federal Reserve is on course to raise interest rates this year or early in 2016, which would raise the opportunity cost of holding gold and push investors into more yield-bearing assets.

(Market News Provided by FXstreet)