Long Samnang, business manager at PPLS
Gold prices have been in an uptrend for three consecutive months since November, recovering from a seven-month-in-a-row drop.
The opening price was $1,914.66 per ounce on Tuesday. Based on the daily price chart, the pattern was indicating a “double bottom”, meaning the price of gold would move higher.
With Chinese New Year just a few days away, PP Link Securities business manager Long Samnang says demand for the yellow metal would increase significantly, pushing up the price.
A “flattening” of the US bond yield curve and a World Bank report citing “a number of adverse developments” leading to possible recession were also key fundamentals pointing to a depreciation in the US currency, keeping gold buoyant in a long-term trend.
As of Tuesday, the US two-year bond yield was at 4.24 per cent, 0.71 per cent higher than the 10-year.
And Samnang – who has more than a decade of financial market experience – explains this indicates the World Bank may have a high demand for utilising money for other purposes, with two-year bonds being sold to investors at a higher rate.
While this is bad news for the US dollar, he adds, it bodes well for safe haven assets such as gold.
Bitcoin.com last week outlined the gloomy details contained in the recent report from the World Bank.
“On January 10, 2023, the World Bank published its Global Economic Prospects report, stating that the outlook for the global economy and future economic conditions is bleak.
“According to the report, 2023 growth forecasts have been cut across the board, with the global economy projected to grow by 1.7 per cent in 2023 and 2.7 per cent in 2024.
“The World Bank also cited a number of adverse developments that could push the world’s economy into a deep recession,” it said.
Samnang says that while gold could drop before the next Federal Reserve meeting on January 31 and February 1 should officials at the central bank give prior indications of interest rate hikes as it tackles inflation, it would be very short term.
For this week’s trading recommendation, Samnang suggests investors and traders consider buying gold when the price retraces to around $1,888 per ounce, setting the take-profit function at $1,905 per ounce and the stop-loss at $1,870.
