Gold is showing resistance near $1,200 an ounce, suggesting prices are for now finding a floor near a one-year low.
Since last week, the metal’s declines have stalled as it gets closer to the price often touted as a key psychological level, trading no lower than $1,204.58. While a stronger dollar and U.S. economic growth are hurting bullion’s appeal, concerns that Turkey’s financial crisis could spread may be preventing a further selloff.
“We are seeing the metal put up a fight against the stronger dollar, with the contagion risk attracting some demand,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by email.
Gold is still heading for the longest run of weekly losses since 2016, and there are other signs investors are losing faith. Holdings in exchange-traded funds are at a six-month low and money managers have never been so bearish. On Friday, traders will be closely watching Turkish President Recep Tayyip Erdogan’s address to the nation and U.S. inflation data for the impact on gold.
Gold for immediate delivery fell 0.2 percent to $1,210.38 in London, and is down 0.4 percent this week. While the trend remains bearish, there’s a possibility of a technical rebound to $1,230 or $1,235 in the coming weeks, according to Carlo Alberto De Casa, chief analyst at brokerage ActivTrades.
“Erdogan is the biggest risk, with the lack of market assurance potentially sending the dollar even higher,” Hansen said. “It’s probably still too early to pop the champagne as the gold bears are still in control and have yet to be challenged.” — Bloomberg