Gold Prices Trade Just above $1,160 per Ounce
Gold Prices: How Long Will They Trade below $1,200 per Ounce?
Downtrend channel
June gold futures contracts trading in COMEX have been trading in a downtrend channel. Gold prices have been trading in a range and fluctuating between $1,180 and $1,220 per ounce for the past two months. The appreciating US dollar is putting pressure on gold prices.
Key support
Gold prices declined for the fourth day in a row. This bearish sentiment and the strong US dollar will drive gold prices lower. The key support for gold prices is seen at $1,150 per ounce. Prices hit this mark in March 2015. Slowing demand from India and China might also put pressure on gold prices. In contrast, increasing US inflation might support gold prices. Historically, gold is used as a hedge against inflation. The key resistance for gold is seen at $1,250 per ounce. Gold prices hit this level in February 2015.
The trading range and downtrend channel suggest that prices could fluctuate between $1,160 and $1,240 per ounce in the near term. The average cost of producing gold across various mines ranges around $1,000–$1,200 per ounce levels. Psychologically, gold prices hitting $1,150 per ounce means that gold traders, jewelers, and distributors could get into buying action.
Lower gold prices impact gold miners like AngloGold Ashanti (AU), Goldcorp (GG), and Yamana Gold (AUY). These stocks account for 17.58% of the Market Vectors Gold Miners ETF (GDX). They also impact ETFs like the iShares Gold Trust (IAU).
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