5 REASONS TO BELIEVE GOLD PRICES COULD RECOVER TO $1,200 AT YEAR-END - HSBC

The bank made a forecast for the price of gold at year-end and estimated that it will be increase as much as 10 percent higher than current levels. The bank set out five reasons in a report on Friday for the experts to believe gold prices could recover to $1,200 per ounce at the year-end.

1. Fed tightening is already priced into gold
"With a shift in the Federal Reserve's policy having been anticipated in the financial markets since as early as 2013, some of the declines based on a rate rise have already occurred." Thus, the reaction of the gold may not be negative one in any case.

2. Actual Fed hikes could see gold prices rise
"This pattern has important ramifications for gold. History shows that gold prices…generally rise, though sometimes with a lag, after the first rate hike."
3. There's scope for a short-covering rally
Short positions on the Comex touched the peak on July 7 while long positions are at their highest since December 2009.

4. Low prices will, ultimately, spur demand
"In important gold consuming nations, such as China, India, Indonesia, and Vietnam, as well as other EMs, consumers may have fewer tools at their disposal with which to protect savings and household wealth against rising prices or low or negative real interest rates."

5. Central bank buying will remain supportive
"The PBoC is an important central bank with significant influence. The mere fact that they have accumulated gold may lead other EM central banks to examine purchasing bullion. Also many central banks hold quite low levels of gold reserves in relation to their forex holdings, leaving room for further accumulation."

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GOLD - WE ARE LOOKING FOR $980 PER OUNCE

Gold dropped below key support level at $1150 and for now we are looking at the next support target near $980. Historical support level for gold is $1180 which was broken as well and the price to continue falling towards the next support level at $980.

It was in March 2015 when gold fell below $1180 and traders waited for a further fall but price rebounded. And for now, the gold has fallen below $1180 and the next target for now is $980.

By the way, the gold price moved sideways for two years starting in June 2015. And between June 2013 June and January 2015 the sideways movement was below the long-term trend line with the primary bearish condition.

The bearish features on the gold chart showed that there is a good probability for the gold to break $1150 support and a continuation of the downtrend towards  $980.

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GOLD RISES FOR FIRST TIME IN 11 DAYS, BUT GAINS SEEN CAPPED

On Thursday gold stemmed the 11-day losing streak, but still held below $1,100 an ounce.

Comex gold for August delivery added $4.70, or 0.43%, to trade at $1,096.10 a troy ounce during European morning hours.

A day earlier, gold dropped to $1,085.60 before recovering mildly to close at $1,091.50, down $12.00, or 1.09%.

Prices of the yellow metal plunged to a five-year trough of $1,080.00 on Monday.

Gold has been under heavy selling pressure in recent months amid speculation the Fed will raise interest rates for the first time in eight years as soon as September.

Demand for the greenback remained buoyed after data on Wednesday showed that U.S. existing home sales rose to an eight-and-a-half year high in June.

The National Association of Realtors reported Wednesday that sales of existing homes in the U.S. rose 3.2% in June to 5.49 million units, the fastest pace since February 2007. Analysts had expected the data to show a 1.2% rise - to 5.40 million units.

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