While financial uncertainties were
influencing gold prices, we have lately seen geo political uncertainties giving
the yellow metal's safe haven appeal a further support if not permanent a
temporary one. The failed military coup
in Turkey did manage to shake the markets.
Spot gold prices turned higher,
reversing earlier losses in late trade on Friday in New York after Turkish
Prime Minister Binali Yildirim said a group within the country's military has
attempted to overthrow the government. For several hours overnight on Friday
violence shook Turkey's two main cities, as the armed faction which tried to
seize power blocked a bridge in Istanbul and strafed the headquarters of Turkish
intelligence and parliament in Ankara. But the coup attempt crumbled as Erdogan
rushed back to Istanbul from a Mediterranean holiday and urged people to take
to the streets to support his government against plotters he accused of trying
to kill him. The government declared the situation under control, saying 2,839
people had been rounded up, from foot soldiers to senior officers, including
those who formed "the backbone" of the rebellion.
Earlier on Thursday, spot gold price
crashed down to a two-week low of $1,320.45 after the Bank of England’s (BOE),
contrary to expectations, kept interest rates unchanged in its Thursday
meeting. In a somewhat surprising move, the Bank of England (BoE) decided to
keep rates steady despite fear over the health of the UK economy following the
Brexit vote.
Holdings in Global Gold ETF’s rose on
Friday but lost about 10 tons in total over the week to 2002 tons, which was
the biggest decline since March/April this year.
Gold continues to trade range bound
between USD $1,320 - $1,340, however participants are still looking to play on
the long side and we are likely to see moves lower well supported.
I largely see the spot gold price
supported at the $1,300 level due to a post-Brexit global economic uncertainty
and possibly lower US interest rates and given this critical situation at
Turkey, precious metals prices are expected to move higher as they have always
been influenced by geopolitical uncertainties.
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Previous blog:
Bullish direction of Gold and Silver prices: RSBL - http://riddisiddhibullionsltd.blogspot.in/2016/07/bullish-direction-of-gold-and-silver.html
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