The price of the yellow metal has been on bearish mode since it hit its highest point at USD 1856 per oz. in 2011, but now analysts say gold is reversing the trend and may even hit the USD 1,400 mark before 2016 ends, Market Oracle reports.
This reverse was recently seen when gold broke a "key resistance" line and made it to USD 1,174. The sharp move was apparently a test run before gold took a dip and sat at a comfortable level at USD 1,166.
However the move is a break from a three-month high and a sign for many that a stronger bullish move is gathering momentum, UK's The Week reports. Market watchers believe that puncturing the resistance line and gold's subsequent pullback indicates it is preparing to hit a higher barrier.
The reports also mention that Denmark's Saxo Bank senses "a change of sentiment" and that gold rising beyond USD 1,170 August confirms a new pricing floor.
The Week further reports that weak economic data from China have quit expectations of the rise of U.S. interest rates. The sentiment over interest rates is one major factor that has hindered gold prices in 2015. This can be clearly seen after the U.S. Federal Reserve released the minutes of the meeting on Friday, traders took advantage to force gold on an upward move. A rates rise would hamper the growth of non-yielding commodities and strengthen the dollar, but nudge gold out of its comfort zone.
The Fed minutes show that policymakers are hesitant about raise borrowing costs and are more willing to wait as developments in emerging markets are being evaluated. Bloomberg hints that a weak jobs report and the "split" on the committee will let rates stay where they are till March.
The Week also notes that there is a positive move for holdings in gold-backed exchange-traded products as it continues to climb this week. Beyond the paper gold, China is experiencing a sharp demand for physical gold; one large gold retailer reported a 22 per cent rise in sales.
Market analysts also advise that with gold rebounding and breaking away from USD 1,170, traders should aim to gain beyond USD 1,200.