The volatility has increased in the gold market. After the US Federal Reserve changed the interest rate on Wednesday and the US dollar strengthened, the asset lost more than 2% in price and returned to the level of $1400 per ounce. This corresponds to the lower limit of the medium-term price channel, in which gold has been moving since late June. In total, these factors made it possible to stop the decline. It was followed by a rather impulsive growth, and as a result, the bulls added almost $50 to the price. After a correction, the quotes are in the middle of the medium-term price channel, which upper limit at $1460 is likely to become a short-term target.
Medium and long-term expectations of analysts are also quite optimistic. Refinitiv GFMS Gold Survey expects gold to average $1350/oz in 2019, with an option of breaking the $1500 level in the second half of the year. According to the World Gold Council (WGC) report, global demand for gold in the first half of 2019 increased by 8%. Gold demand rose to a three-year high amid increased purchases from central banks, as well as investments in gold-backed ETFs.
For six months, central banks purchased over 374 tons of gold, which is the largest net increase in world gold reserves over the past 19 years. The ETF assets have grown by 107.5 tons since the beginning of the year. The main factors stimulating the influx were continuing geopolitical instability, soft comments from central banks regarding monetary policy and rising gold price in June.