The rates continue within the downward trend in a rather narrow range. Gold has already reached a minimum price for the past 12 months and continues decreasing, despite the long-term forecasts about the inevitable appreciation of the gold's value. The rapid decreasing in prices is associated with the strengthening of the dollar, as well as with worsening of trade relations and the development of trade wars. Therefore, gold as a commodity has become a less attractive asset for investors, considering the perspectives of reducing demand.
In the near future the situation is not expected to change. The dollar will be supported by strong macroeconomic statistics, while the FED, despite the Trump's disapproval, is not going to give up its aggressive monetary policy. Today the market expects new data about US GDP. Investors expect that GDP in the second quarter of 2018 to have increased by 4.1%, that is twice more compared to the first quarter. Analysts suppose that considering previous data, the GDP forecasts will match the actual data or will be higher than expected. This will certainly further strengthen the dollar's position.
Despite the decrease in gold prices, analysts have not changed their long-term forecasts and expect a rapid increase in the medium term, unless the dollar fails to reach new price highs. According to analysts, demand for the "yellow metal" will increase, causing a deficit on the market amid lower extraction volumes. In China, for example, gold has already decreased by 8% in the first half of the year due to the tightening of the environmental protection requirement and the complication of obtaining licenses for extraction. At the same time, gold imports to China increased by 75% compared to the same period in 2017. Analysts also suppose that investors will soon return to gold as a safe asset, taking into account the prospects of a worsening situation in the world economy.
In the short term, we can expect a further decrease in gold prices to 1210-1200 USD. However, even now opening the deal to buy would be reasonable, given the long-term forecasts for the value of gold. The stochastic oscillator indicates the rates in the oversold zone, which is also a signal for the deals to BUY. Still, short deals on the trend can be effective for at least a week due to positive background for the USD.
