The Week In Hindsight; 04 July 2014

Spot gold held up relatively well throughout H1 of the week despite that both Iraq as well as Ukraine have quietly receded from the headlines, indicating that both investors and traders remain guarded against any potential return to prominence for geopolitical or conflict risk.

Despite calm trading during the opening the early sessions, US employment numbers released on Thursday surprised to the upside; leading to heavy selling of gold for the remainder of the afternoon.

Although prices later recovered, the road ahead for the precious metal is less than clear. This is as the potential for further violence across conflict hotspots remains a viable threat to investor sentiment globally, while the better than expected economic data also provides scope for broader rebound across economic barometers throughout the weeks and months ahead.

If such a rebound materialises then gold could once again find itself under sustained pressure. For the time being, with volatility low and investor sentiment relatively positive, we do not foresee any break above the $1330 level as likely to be sustained.

Instead we view a return toward the $1300 mark as the most likely outcome for a week where the economic calendar appears lacking of any substantive news from the US economy; barring FOMC minutes on Wednesday.