Global macro overview for 20/07/2015:
The upbeat economic data from the US last week made fresh expectations about the September FED rate hike more alive. The immediate result of this speculations was a massive drop in gold prices in the early Asian trading hours. Gold futures in New York traded 2.4 percent lower at $1,107.93 an ounce after dropping as much as 4.6 percent losing more than $50 at about 9:30 a.m. The explanation of this move down is rather simple: any increase in the US interest rates should further strengthen the dollar, hence more funds will see outflows from commodities, metals and emerging-market assets. Moreover, according to Kitco News "Main Street vs Wall Street" survey this week, 68% (247 out of 364) participant expect to see further gold decline next week and 25% (90 out of 364) would rather see higher gold prices.
Amid the extreme market bearishness, interesting seasonal correlation can be spotted in gold behavior since 2008: the seasonal trend is to bottom in June-July period and rally for the most of the year. If the trend is set to continue, the bounce from the key support zone might be a good buy opportunity in coming weeks.