Gold has played a crucial role in the history of humans, especially in its use as a medium of exchange and a store of value. In addition to its usage in jewelry, the precious metal is also regarded as a safe-haven asset. This makes it a good investment to hold during times of uncertainty. The yellow metal is also a good hedge of inflation.
Earlier this week, the price of gold hit a new high, bolstered by a softer greenback.
The precious metal’s price will be propped up by the central bank’s monetary easing cycle and the expectation of higher rate cuts. The increasing geopolitical tensions in the Middle East may also drive more investors toward this yellow metal.
Traders are advised to observe the reading of the U.S. PMI data. A stronger-than-expected outcome may weigh on the price of gold while lifting the dollar. Analysts at FxPro argue that the price of gold may be pushed into new highs if short positions are liquidated. However, they add, increasing bond yields makes the environment for the precious metal unfavorable.
This comes after President Patrick Harker of Fed Philadelphia stated that the Federal Reserve had navigated a difficult economy over the last couple of years. Harker added that soft and hard data were both crucial in decision making.
Michelle Bowman, a member of the board for the Federal Reserve System, added that it was a good move to alter the rate level for Fed funds. This, she added, was because the inflation target hadn’t been achieved. Christopher Waller, another member of the Fed board, added that the move to reduce rates of interest by 50bps was a good call. However, he continued, the Federal Reserve could take a breather as it waits on additional data.
Currently, the price of gold continues to increase day by day, supported by the 100-day Exponential Moving Average.
The precious metal’s 14-day Relative Strength Index adds up to 70.50, which indicates the overbought condition. This proposes that consolidation can’t be excluded before positioning for any short-term increase in the price of the precious metal. Experts expect that the metal will approach major resistance as it gets closer to its all-time high of $2,625.
Any price above this level could lay the foundation for $2,700 an ounce. However, breaching the $2,600 downside target may also see the metal’s price drop to $2,560, before dipping even lower to $2,485.
As the headwinds driving the price of gold gather momentum, more interest is likely to be directed toward various gold exploration enterprises such as Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) as investors look to gain exposure to gold stocks during their ascent.
NOTE TO INVESTORS: The latest news and updates relating to Eloro Resources Ltd. (TSX: ELO) (OTCQX: ELRRF) are available in the company’s newsroom at http://ibn.fm/ELRRF
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