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Asian shares came within reach of testing their 2016 peak on Wednesday as prospects of solid U.S. growth and accommodative economic policy in major countries whet investors' risk appetite damaged by uncertainty from Brexit.
Whenever there is some short-term pressure, a range of $1,330 could be a very good entry point for people who have been bullish, but hesitant of chasing the prices, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
"There was some selling in early trade, which seemed to be a bit of weak longs that were getting stopped on the break of the $1,330 level. Since then we have just been grounding back up," said a Sydney-based trader, who did not want to be named.
"In the medium to longer term, the market will be pushed high, but I would not be surprised if there is further longer liquidation and maybe a push towards $1,300 in the next few sessions."
Spot gold may drop to $1,308 per ounce, as it has pierced below a support at $1,334, according to Reuters technical analyst Wang Tao.
It’s been a stellar six months for gold investors. The yellow metal has surged 28 percent year-to-date, its best first half of the year since 1974. And now there are signs that the rally is just getting started.
That’s the assessment of analysts from UBS and Credit Suisse), who see gold entering a new bull run. According to UBS analyst Joni Teves, gold could climb to $1,400 an ounce in the short term on macroeconomic uncertainty, dovish monetary policy and lower yields. “These factors,” Teves writes, “justify strategic gold allocations across different types of investors” and should encourage hesitant investors to participate.
Joining UBS in forecasting further gains is Credit Suisse, which sees gold reaching $1,500 by as early as the start of next year. As Kitco reports, Credit Suisse analyst Michael Slifirski writes:
“The surprise Brexit vote has solidified and intensified macro and political uncertainty and extended the time frame for a negative real rate environment in the U.S. and potentially abroad.”
Reference: Reuters,Investing
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