Oil Prices to Drive Gold Futures Lower This Week Amid West Asian Tensions
Gold futures on Bursa Malaysia Derivatives are expected to trade lower this week, driven by crude oil prices amid tensions in West Asia. Stephen Innes, managing partner of SPI Asset Management, said gold remains inversely correlated with oil prices in the current environment.
In other words, if oil prices rise, gold is likely to come under pressure, while a decrease in crude should provide support for the precious metal. According to Innes, there appears to be structural support around the US$4,000 per troy ounce level.
He noted that China's central bank was still buying gold in May, and that official-sector demand remains one of the market's primary sources of support. For this week, Innes expects gold to trade within a US$4,010 to US$4,110 per troy ounce range.