Although gold prices are still higher than the bottom recorded in March, this precious metal has just touched another negative sign as prices have shifted to a decrease since the beginning of the year.
World gold prices recorded at 9:07 am on June 10 (Vietnam time) listed around the threshold of 4,180.6 USD/ounce, down 151 USD compared to the previous day. Gold prices have fallen more than 5% since Friday, when the price broke through the important support threshold at the 200-day moving average.
In the latest report on precious metals, Ms. Suki Cooper - Global Director of Commodity Research at Standard Chartered Bank - said that the sell-off may be stronger as investors liquidate loss-making positions in gold-backed exchange-traded funds.
We expect price movements to become more vulnerable in the short term, due to macroeconomic resistance. Gold has begun to be re-influenced by real yields," she said.
Ms. Cooper explained that, according to convention, investment demand in the ETF market is closely correlated with real yields compared to other structural factors in the physical market. Increased inflation is forcing the market to assess the possibility of the US Federal Reserve (Fed) raising interest rates by the end of this year.
These market expectations are pushing real yields up, thereby increasing the opportunity cost of holding an unprofitable asset like gold.
Short-term speculative positions shifted to positive in May, but ETP holdings fell by 16 tons and continued to decline in June," she said.
Ms. Cooper said that the first technical threshold that investors need to monitor is around 4,250 USD/ounce: "Capital flow analysis of gold ETPs shows that at least 270 tons of gold held are in a loss-making state at recent low prices, around 4,250 USD/ounce. This figure increases to 465 tons if we assume that the net withdrawal this year is profitable and is set at lower prices, according to the pre-import - pre-export (FIFO) method" - she said.
Loss-making positions will increase to 298 tons if the price falls to $4,000/ounce. ETP holdings are vulnerable in the short term and could put gold at further risk of depreciation, with the next technical support level around $4,100/ounce.
Ms. Cooper added that the rebound of the USD is also creating more resistance for gold. However, she remains optimistic that gold prices may recover in the medium term.
Loss positions will increase to 298 tons if the price falls to $4,000/ounce. ETP holdings are vulnerable in the short term and could put gold at further risk of depreciation, with the next technical support level around $4,100/ounce," she said.
