Gold prices declined further on weekly basis as sentiment tended more towards risk. Trades were influenced by the passing of an austerity plan in Greece, which led to a large sell – off on Friday. Thursday also marked enf of the month and the passing of the second quarter of the year.
Despite losing for the past two weeks, the yellow metal has already gained around 5% and takes the title of the best performer in the precious metals’ complex. However, the Eurozone sovereign debt plagues may rise again until a long term solution is found.
Furthermore, gold once again debunked the inverse correlation with the US dollar as it declined alongside a mostly weaker dollar. The unwinding of safe – haven trades mostly pushed gold lower. “With market players now more willing to take risks, gold is unlikely to make strong gains in the immediate future,” analysts with Commerzbank said in a note.
Despite the Greek crisis, the largest decline against gold was in the euro, which fell in the first half of the year by 2.1%. It‘s worth noting again, gold is likely to remain under pressure for some time as demand drops from Asia while we enter these summer months. Many analysts continue to predict higher prices for gold in the long – term, “Despite the most recent setbacks we do not see any reason to say that the multi – year gold rally has come to an end,” says German refiner Heraeus, adding that financial markets are “still too uncertain,” while others draw comparisons to the daily price movement in gold from the 1980s.
