Despite high turbulence in the financial markets, caused by ambiguous news and macro-economic statistics and expectations of the US Fed interest rate decisions, demand for gold remains high among the investors.
The price of gold has been rising since the beginning of the month and for the third consecutive week. Closing price of the August futures at COМEX last Friday has grown by 0.3% up to 1275.90 USD per troy ounce.
Today, the price of gold continues to grow, after breaking the morning gap, caused by poor data on Chinese retail sales for May.
The fall in government bond yields all over the world, and uncertainty in the global economic growth forces market participants to purchase gold as a safe-haven asset. The yield on government bonds of Germany, the UK and Japan fell to record lows.
A chance of the British exit from the EU and possibility of redistribution of the financial resources in the world which may follow after this event, causes the increase in demand for gold. Interest rate decisions of the Bank of Japan, Bank of England and Swiss National Bank this week, will also contribute to the growth of the price of gold as a safe-haven asset.
Possibility of the interest rates hike in the USA in June is very low.
Expectations of a rate hike in July have dropped to 20%.
Low level of the interest rate is usually favourable for the rise in gold price, as investing in this precious metal does not bring dividends. In case of the high interest rates gold cannot compete with such assets such as Treasury bonds, which can bring high profit.
It is likely that the price of gold will continue to grow. It is advisable to open long positions on gold. And it seems that long positions will be more preferable in the long-term, than in the medium-term, which is supported by the fact the Bank of Russia and a billionaire George Soros have been buying gold recently.