Rising optimism in financial markets and deflationary risks are pushing bond yields higher, which is weighing on the gold market; however, there are still reasons to be optimistic on gold prices in the long-term, according to Bart Melek, head of commodity strategy at TD Securities.
In an interview with Kitco News, Melek said that he continues to expect gold prices to push higher through the rest of the year. However, he warned investors that the road to record highs will be bumpy.
“We’re not going to get any drifts significantly below the lower bound [of gold prices],” Melek said.
Although short-term selling pressure pushed gold briefly to a one-month low Wednesday, the price has managed to hold critical support around $1,700 an ounce. Melek said that in the current environment, he could see gold prices fall another $20 to $30 an ounce; however, he also noted that there is monetary policy and fiscal stimulus will ultimately provide significant support to the precious metal.
On the upside, Melek said that $1,800 an ounce could remain a significant resistance point for the rest of the year.
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