(Kitco News) – The gold market has found a further rebound in its march, with the spot market retesting its 200-day moving average as bond yields continue to decline.
Bond yields in the afternoon session in New York fell to a low of 1.16%, which in turn pushed spot gold prices to $ 1,815.40 per ounce, roughly unchanged that day. Gold futures prices on the Comex are still trading below the 200-day moving average but are near session highs.
December gold futures traded last at $ 1,819.50 an ounce, up 0.13% on the day. Bond yields and gold started to move after data showed slower-than-expected growth in the US manufacturing sector.
The Institute for Supply Management said its manufacturing index posted a reading of 59.5% in July, down from the June reading of 60.6%. According to consensus forecasts, economists were expecting a level around 60.9%.
Some economists have noted that mixed economic growth in recent weeks could force the Federal Reserve to halt plans to cut its monthly bond purchases by the end of the year, which would be bullish for the gold.
Daniel Pavilonis, senior commodities broker at RJO Futures, said gold continues to benefit from mounting inflationary pressures as the US central bank has to maintain its ultra-accommodative monetary policies.
He added that the latest fuel in the heat of inflation is the US government’s $ 1 trillion infrastructure bill, which continues to pass through Congress.
“No matter where you look, inflation is there and the Federal Reserve is going to stay accommodating,” he said. “The infrastructure bill is going to be incredibly inflationary, and it will be good for gold. “
“Gold has managed to push back its 200-day moving average, and if it can stay here, we could see a big move upward,” Pavilonis added.
However, not all analysts are convinced that gold is ready to explode. Some analysts see gold still in a holding pattern, particularly ahead of Friday’s jobs report.
According to consensus reports, economists expect 895,000 jobs to have been created in July. Some economists have said that a significant number of jobs could prompt the Federal Reserve to reduce its monthly bond purchases by the end of the year.
In an email comment to Kitco News, Darin Newsom, chairman of Darin Newsom Analysis, said the development of the price of gold indicated a lot of indecision in the market ahead of Friday’s jobs report.
Despite the positive price action on Monday, many analysts see gold trading in a range between $ 1,830 an ounce and $ 1,790 an ounce.
In a note released Monday morning, Margaret Yang, market strategist at DailyFX.com, said she was monitoring near-term support at $ 1,790 an ounce.
“Technically, gold prices may form a ‘Double Top’ pattern after failing to break through resistance at 1,835 for a second try. Immediate support levels can be found at $ 1,790, ”she said. “The MACD indicator flattens out, suggesting that the bullish momentum may fade. “
Some market analysts noted that while gold managed to recover on Monday, other important commodities are struggling. Oil prices continue to fall sharply on Monday, with West Texas Intermediate crude falling to around $ 71 a barrel, falling more than 3% on the day.
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