With the release of the June U.S. employment report, the price of gold broke down through its recent low of $1,220 per ounce to the next support level of $1,200 per ounce. This was because the numbers in the report did not seem to present any obstacles to the Federal Reserve's plans for more interest-rate hikes later this year.
However, gold remains up 2.33% for the year, and analysts still consider it to be in a long-term bull market (see chart). If that is correct, then this current low would present an excellent buying opportunity, especially if gold bounces back quickly.
As reported by Kitco, "In their latest market report, analysts at Bank of America Merrill Lynch said that they remain constructive that gold could end the year around $1,400 an ounce.
“'Our economists believe that continued Fed rate hikes in an environment of falling inflation may be increasingly difficult to justify. … Broadly, we believe that there are various alternatives to protect portfolios against increasing policy risk and a rapid reversal in investor positioning. Investors could opt to increase their gold allocations.'”
Rick Andrews is president of Avant Capital Management