XAU/USD: will the Price of Gold Reaches the Level of 1300 USD per Ounce?

XAU/USD: will the Price of Gold Reaches the Level of 1300 USD per Ounce?

Despite the decline in the price of gold in the last three days, market participants believe the gold will resume growth and by the end of this year the price can reach the level of 1300 USD per ounce.

The main factors, which can cause the rise in the gold price, can be soft monetary policy of the US Fed, low prospects of the USD and negative interest rates in some of the countries. Gold does not bring its holders interest revenue and low interest support the rise in the price of gold. Since the beginning of this year gold has grown by 19%.

However, after the correction caused by taking profit on long positions of gold, the pair XAU/USD can continue to rise.

Negative rates in Europe, Japan and Switzerland also boost the purchase of gold.

Strong US economic data including labor market will support the USD and prevent the rise in the price of gold.

Meanwhile inflation in the USA has been lower than 2% for over three years. US Fed predicts that inflation rate will reach target level not earlier than the year of 2018.

It is due to low rate of inflation and decrease in inflation expectations the US fed cannot lower interest rate after the rate had been fixed in the range of 0.25%-0.50% last December.

Last month president of the US Fed in Saint Louis, James Bullard said that the US Fed should continue the rise in interest rate until stabilization of the inflation expectations.

The price of gold will be supported by political and economic instability and increased turbulence of the financial markets. There is every reason to believe that the price of gold will increase.