25.09.2014 - The fall of gold should end soon
The price of gold continues a gradual decline against the strengthening of the dollar. Data on the housing market, which is the most risky for investors indicator of major macro data unexpectedly showed a significant improvement. Thus, new home sales rose to 504 thousand in August against 427 thousand in July. In addition, Mario Draghi announced his readiness to use new tools to deal with low inflation that in the future will continue to strengthen the dollar.
Despite this the potential for further fall of price is limited by the cost of production of gold, as well as in connection with the activation of buyers in Asia, where demand for gold is increasing in the 4th quarter due to holidays in China and India. An additional factor that may support gold prices can become significant correction on the stock markets. We expect that the price will reach 1180-1200 the levels, after which the gold purchases are likely to resume, and the price will rise. We maintain our positive forecast with the medium-term target near $ 1,300 per troy ounce.