Gold expected to climb despite temporary slide
Despite no signs of another round of US monetary stimulus, gold prices will climb further as investors may not reduce the volume of the precious metal in their portfolios because of the unclear status of the US economic recovery, Thai gold traders said.
The central bank is also closely monitoring high fluctuations in the currency market.
YLG Bullion and Futures said gold prices plunged by US$100 an ounce after the US Federal Reserve did not signal the possibility of a third round of quantitative easing because of the improving economy in that country. The news disappointed markets on Thursday, but a buying spree later supported gold prices.
The sharp fall in gold prices came as a good opportunity for investors to buy. However, it is too soon to see a change in fundamentals.
Technical rebounds in the precious metal’s price came as expected because of its sharp drops, YLG said, noting that the resistance level was set at $1,726 an ounce.
If the gold price breaks through this level, it will rise further to the next resistance level of $1,740-$1,750 an ounce. However, if the price is not able to surpass the $1,726 level, investors should be careful of another selling spree.
The price is expected to fall through its support level at $1,700 an ounce, YLG said. If the it is not able to sustain such a level again, a further drop is expected with another support level of $1,650 an ounce. Within one month, if the price slides from the $1,700 support level, positive news will start to decline.
The Bank of Thailand is closely monitoring the baht, which is fluctuating on foreign capital movements, Assistant Governor Pongpen Ruengvirayudh said yesterday.
The baht has advanced 3.1 per cent this year after foreign investors were net buyers of Thai stocks worth Bt55.05 billion from the beginning of the year until yesterday. The baht was trading at 30.53 to the US dollar as of 3.45pm yesterday.
