(Kitco News) – After falling to the mat last week, the gold market has bounced back and is fighting tooth and nail to reclaim the $2,000 ounce level.
The precious metal market has seen a resurgence of momentum after suffering its biggest weekly loss since March. December gold futures last traded at $1,989.90 an ounce, up 2% on the day. The yellow metal briefly pushed to $2,000 before falling back down.
While the gold market has been in the spotlight, some analysts have noted that silver is the metal investors should keep an eye on. Silver outperformed gold Monday with prices rallying more than 5% during the session. September silver futures last traded at $27.55 an ounce.
Gold and silver saw consistently higher prices through the Monday session as a weaker U.S. dollar and disappointing global economic data came in during the weekend.
Looking at gold, analysts have said that after Monday’s rally to $2,000 an ounce will be the key level to watch this week as the precious metal appears to be entering a new consolidation period.
“Tuesday will be an important day for gold and we need to see if we get some following through buying after today’s rally,” said Charlie Nedoss, senior market strategist with LaSalle Futures Group.
Nedoss added that last week’s selloff, while significant, was a healthy correction for the market. He added that with a weaker U.S. dollar and falling bond yields, he is not surprised that gold has made a strong comeback at the start of the week.
Although bond yields started the day near a one-month high, they have seen a steady decline Monday afternoon. U.S. 10-year bond yields last traded at 67 basis points, down more than 4% on the day.
“This move in the bond market is definitely a bullish environment for gold,” Nedoss said. “The question is: can this help gold break above its 10-day moving average at $2,000 an ounce.”
However, it’s not just U.S. markets that are helping the gold market recover its lost ground. Bill Baruch, president of Blue Line Futures, said that rising geopolitical tensions between China and the U.S. are creating a win-win scenario for the precious metals markets.
Not only are China and the U.S. nowhere near close to resolving their trade and economic issues but overnight, the Chinese central bank unleashed more stimulus measures to support its faltering economy, which has been pressured by U.S. sanctions and devastated by the COVID-19 pandemic.
“These stimulus measures are a huge tailwind for gold,” Baruch said.
Baruch said that he is currently watching support between $2,004 and $2,010 in the near-term. As to how investors should play the current gold market, Baruch said that investors shouldn’t be chasing prices at current levels.
“You should already be in gold and enjoying the rally,” he said.
George Gero, managing director at RBC Wealth Management, said that he thinks it’s only a matter of time before gold prices push back above $2,000 an ounce.
“Gold still has everything going for it,” he said. “Looking past all the technical factors, there are still fundamental reasons for investors to hold gold and for prices to go higher,”
Tuesday markets will be paying close attention to the U.S. housing market as the U.S. Census Bureau and the U.S. Department of Housing and Urban Development release construction data for July.
