Gold prices decline, on track for first loss in 10 sessions

New York (July 30)  Gold prices headed lower Thursday, with bullion retreating from a record rally that has seen the precious metal notch nine consecutive days of gains.

The precious metal found support Wednesday following the Federal Reserve signaling it planned to keep the low interest rate environment in place for the foreseeable future as the U.S. economy recovers from COVID-19. Benchmark federal-funds futures rates stand at a range between 0% and 0.25%.

However, some analysts make the case that gold prices may be entering a period of consolidation following a historic run-up that has been at least partly prompted by the public-health crisis, but also exacerbated by a recent bout of weakness in the U.S. dollar and the low yields being offered by government debt.

One measure of the dollar, the ICE U.S. Dollar Index DXY, -0.43%, is hanging around its lowest level in two years and the yield for the 10-year Treasury note TMUBMUSD10Y, 0.549% is around 0.55%.

As expected and forecast, gold has reached record highs near $2,000 an ounce and silver reached multi-year highs near $26 an ounce, but prices were “due a sharp correction,” said Mark O’Byrne, research director at GoldCore, based in Dublin.

 Gold is ‘quite likely’ to climb to $3,000 in the next 12 months, and silver could rise to between $50 and $100. 
— Mark O’Byrne, GoldCore  .
“Short-term weakness is very likely prior to a massive short squeeze that propels the precious metals to much higher levels,” he told MarketWatch Thursday. Gold is “quite likely” to climb to $3,000 in the next 12 months, and silver could rise to between $50 and $100.

“Focus on value and not price—it is important investors focus on gold and silver’s value as hedging and safe haven assets rather than their nominal price highs in dollars,” said O’Byrne.

August gold GC00, -0.46% GCQ20, -0.47% fell by $10.20, or 0.5%, at $1,943.20 an ounce, after settling at a record on Wednesday for a most-active contract, marking its ninth straight advance, which is its longest win streak since a 10-session climb ended in January.

However, global gold demand declined in the second quarter and first half of this year overall, but demand for gold as an investment climbed to a record as exchange-traded-fund holdings reached an all-time high by the end of June, according to a report from the World Gold Council published Thursday.

MarketWatch