Gold Bounces Back This Month After May’s Price Disaster

After four months of hovering around the $1,250 mark, gold seems to have got off to a positive start this month as it shows signs of slow but steady gain. Unfortunately, gold experienced an all-time low last month, and investors are still bearish on the precious yellow metal’s return to the $1,300 price level. 

According to a report by Reuters, gold recovered from the slump it experienced during the last week of May, with the prices dipping below $1,250 at $1,242. The report attributed the price hike this month to the decreasing demand for the commodity even if investors had the chance to buy gold at its lowest price since the beginning of January. Also, the live gold price at BullionVault recorded similar results, with gold closing this week at an average of $1,252.85 between June 4 and June 11. 

“Around these levels, we can say demand seems to be slowing down a little bit. On the investment side, I don’t think people are aggressive,” Hong Kong gold dealer Ronald Leung told Reuters. “Sentiment is slightly bearish. We’ve got to see whether the downside at $1,200 is a good point to buy. On the upside, $1,275 to $1,280 is not easy to break through.” 

Even the Wall Street Journal’s MarketWatch has posted a positive forecast in regards to gold futures for August. According to their August 2014 chart, gold may soar to $1,260 next month, resulting in the price of the yellow metal moving closer to the price it held before its dramatical drop at the end of May. However, MarketWatch’s projections of gold prices for said month is still far from the 52-week high at $1,432. 

While the gold market experienced positive news this month, the market sentiment for the gold seems to be a bit bearish after May’s slump. VTB Capital bullion analyst Andrey Kryuchenkov said that major investors in Europe veer away from gold at the moment because their current goal is acquiring blue-chip equities. Also, Kryuchenkov noted that gold’s price is affected by the Federal Reserve’s ongoing stimulus measures and other assets having better returns than the precious metal investment. 

However, it’s hasn’t just been major market players who have avoided gold bullion and coin investments this year. Juan Carlos Artigas, Head of Investment Research at the World Gold Council, attributed last year’s bullish gold market to the sudden decline in gold investments this year. According to Artigas, buying gold in 2013 was concentrated during the first part of 2013 and it sparked an unprecedented surge in supply among sellers. This year, investors are biding their time until there are clear indicators regarding the precious yellow metal’s status for the entire year. 

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