After breaking through the resistance line established over the previous four weeks, gold prices retraced to the same line extension, which has now become a support line (see the following chart). Gold finished the week at $1,735.59, still in an uptrend on the daily chart.
As the U.S. economy begins to open back up, many are questioning how fast it will recover and if there will be a second virus wave in the fall. Recovery problems in other economies could make things even more unsteady.
“If everything stays the status quo, there are significant tailwinds for gold,” said Michael Ponikiewicz, a portfolio manager with Acadian Asset Management, via CNN Business.
CNN adds, “Experts say that continued global uncertainty, coupled with corporate earnings that are expected to plunge for the remainder of the year, will continue to boost gold.
“After all, Ponikiewicz noted, gold is more attractive right now than another major asset that’s usually popular in uncertain times: long-term bonds. Those yields have plunged due to coronavirus concerns, with the US 10-Year bond standing at just 0.7%.”
Rick Andrews is president of Avant Capital Management.