Gold bulls are once again disappointed with the yellow metal's lack of stride in breaching its key resistance of $1,355 an ounce, Saxo Bank said, adding that the precious metal is being restrained by white metals' poor performance.
'Gold's recent performance has once again been disappointing the bulls who have been backing the yellow metal through increased long positions in both futures and exchange-traded products,' Saxo Bank's head of commodity strategy Ole Hansen said in a note published on Friday.
Hansen pointed out that inactivity in white metals is to blame for gold being stuck in the narrow trading range.
“A dismal relative and absolute performance among the industrial demand-dependent white metals of palladium, platinum and silver has emerged as a drag on gold's ability to move forward and properly challenge a key band of resistance above $1,355/oz,” he wrote.
On top of that, rebound in stocks and the U.S. dollar weighed the yellow metal down last week, pushing aside concerns related to trade war rhetoric between the U.S. and China, Hansen added.
But, Hansen noted that overall geopolitical uncertainty will continue to support gold prices.
“Increased stock market volatility is likely to continue to provide some underlying support. There's no doubt, however, that multiple rejections since 2016 are likely to have sidelined potential buyers who are now happy to sit on the fence while waiting for a potential break above $1375/oz, the 2016 high,” Hansen said.
As Asian markets opened on Monday, gold edged down, with spot gold on Kitco.com last at $1,331.40, down 0.15% on the day.
Kitco’s weekly gold survey revealed that investors are looking for prices to rise next week, led by trade war rhetoric.
But, analysts told Kitco News on Friday that they are not expecting to see a breakout anytime soon.
“I think we could see gold prices push higher by $10 or so but ultimately, interest rate expectations are firmly in place and that will support the U.S. dollar and weigh on gold,” said Bart Melek, head of commodity strategy at TD Securities.
Source: Kitco News