Gold price projections in July 2020



Following the model developed by the AXL Capital Management team, this report provides the projected levels of gold prices for July 2020.

For July 2020 the model indicates an upper limit of 1,877 US$/0z and a lower limit of 1,710 US$/Oz. On average the model indicates 1,788 US$.

The US economy and its reactivation plan were threatening by an increase in the number of people infected by COVID-19 to 3.1 million (the previous month's report indicated 2 million) and 133,420 deaths. Unemployment claims continue to decrease week by week (1.31 MM vs. 1.41 MM). At AXL Capital, we currently see as the only threat to the continuity of the plan to reopen the US economy, a resurgence of the Coronavirus, and the potential quarantine at home with the main factor for the decline of the stock market and a new rally of Gold prices. 

Gold prices in the first week of July surpassed 1,800 US$/oz, a resurgence of the Coronavirus would increase the levels of uncertainty and would put at risk the plan to reactivate the economy worldwide. The US stock market in this scenario would fall, Gold prices in the too short term would also fall but the recovery of the golden metal would be fast and would have been direct towards a potential new bullish rally.


Chart #1: Gold price broke through the 1,800 US$/oz resistance level on July 8th, 2020.

Firstly, the Dow Jones Wall Street index and Gold prices negatively correlated in the medium to long term. However, after the COVID-19 pandemic, the Dow Jones is closing its first week of July approaching more and more its historical highs, and Gold prices are also approaching their historical highs for 2011.



Chart #2: Dow Jones Index (light blue) vs. Gold prices in a hard positive correlation in the short term since the stock market crash on 16 March 2020.

The monthly tracking of model estimates and gold prices from January 2018 to June 2020 for all month-end values is within the assessment. To date, the model operates within its 90% confidence limits.


Chart#3: Tracking model results vs. actual data gold price, monthly closing (10 am LBM) January 2018- June 2020. 

The revision of the estimation error of the average issued by AXL Capital's model for June 2020 versus the real average reported by the LBM (10 am) is 0.8%: 1,720 US$/oz vs. 1,734 US$/oz. The above is within the model's error acceptance range.

  
Conclusion

AXL Capital Management's econometric model projects for July an upper level for Gold prices of 1,877 and a lower level of 1,710. The monthly average would be around 1,788 US$/Oz.

The gold is also acting as a haven asset in times of uncertainty like the present, on July 8th. The price surpassed the level of 1,800 US$/oz and is close to its historical maximum of 1,921 US$/oz in 2011. However, the Dow Jones index in that year only reached a value of 10,800 points versus the 26,030 it is currently reaching.

At AXL Capital, we believe that the positive correlation between Wall Street and gold prices could soon end.


Yro S. Cortez Ramos
Mining Business Development Manager
AXL Capital Management
yro.cortez@axlcapitalmanagement.com


Disclaimer: The results issued by AXL Capital Management are carried out with a deep level of analysis, however, they are subject to potential global macroeconomic variations that have a high level of uncertainty, so those results must be used only for information and do not represent purchase recommendations. / sale or short, long-term investments for the global Gold market, its derivatives, ETFs, or shares of mining companies or any other type of investment.
Ubicación: Estados Unidos

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