The African Standard bank released its daily commodities analysis and report for August 19. The report focused on anticipating gold price next move.
Over the past 2 weeks, gold rallied as the economic data released from China and the US “overshot” expectations, the bank said. The CFTC data released on Friday confirms an explanation of gold gains due to short-covering, for a part, and pushing the price higher. Gold is testing the 100-day Moving Average (MA) at $1,373. ETF holdings and physical market accommodating to the price rally might combine with a close above the mentioned level to result in testing the $1,400 level or higher.
COMEX gold speculative shorts have declined considerably, since the start of August. Speculative shorts in COMEX gold were down by 33.8% which is 115 metric tonnes. However, by the week ended 13 August, gold “failed” to draw new speculative longs, according to the bank. The bank analysts interpreted these data as a short-covering rally, rather than a bullish market.
Physical gold demand has been easing a little in China, the world second largest gold consumer. The Shanghai Gold Exchange (SGE) premium for physical gold was around $22 per ounce for most of last week despite gold price surge to $1,375 level from $1,320. On Friday, SGE premium were at $23 per ounce, compared to the current $19 per ounce. The $19 premium is still high, which might provide supports gold.
Despite the U.S. 10-year bond yield moving to 2.85% from 2.6%, gold price held up firmly. Moreover, ETFs gold holdings increased last week by 66 thousand ounce.
Gold price technical support is at $1,370 then at $1,340 while the technical resistance was at $1,380 and $1,400.