Gold: The price of gold is rising again

Gold: The price of gold is rising again
Gold: The price of gold is rising again

Gold price outlook remains bullish for this summer

From a technical analysis point of view, the price of gold has been stabilizing for several weeks after having increased significantly in March and April following the surpassing of multi-year resistance at $2075. The underlying outlook is bullish above this threshold, but the short-term outlook is also bullish above the support of recent weeks at $2290/2300.

The ounce of gold returned above its 50-session moving average yesterday and seems to have exceeded a short-term bearish slant passing through the peaks of May and early June, which reinforces the short-term bullish outlook. The first resistance to watch will be the May peak at around $2450, then the symbolic threshold at $2500, but an increase to $3000 is possible in the long term.

The outlook is technically constructive on gold prices, and I expect support over the summer from faster disinflation and potentially growth fears. Faster-than-expected disinflation and/or growth fears would strengthen the prospects of a Fed rate cut, which would support gold prices.

The reasons for a potential faster disinflation are 1) a continued deceleration in inflation of rents and vehicles (major components of the PCE core) according to leading indicators, 2) the fall in gasoline prices since the mid-April which should put pressure on the prices of plane tickets and catering services, 3) the drop in food prices and the deceleration of prices of catering services and 4) very weak retail sales since the beginning of spring.

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