Gold’s Performance Lacklustre As Turkey Escapes From Coup Attempt

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Buying interest in gold and the SPDR Gold Trust (ETF) (NYSEARCA:GLD) is on the decline as sentiment is shifting back towards risk assets. Today, gold Futures for August delivery fell steeply but managed to remain 0.08% higher at $1,328.45 against its previous close.

Buying takes pause

Demand for safe haven assets took a breather after a military coup attempt failed in Turkey. The government confirmed on Sunday that it retains full control of the country and economy after military arranged a planned coup against President, Recep Tayyip Erdogan. After the failed bid, the Turkish government has widened its crackdown on the perpetrators of the coup attempt. Gold rose steeply after reports emerged about events in Turkey, however it later pared down its gains.

Mark To, head of research at Wing Fung Financial Group, said that gold is witnessing pressure due to declining risk aversion. He added that an increasing number of market participants are factoring in the need of higher stimulus packages by central banks across the globe to support national economies, which is favoring risk assets. At the same time, a positive surge in U.S. retail sales data during June also added to pressure on bullion.

Jefferies ups outlook

In miners, Barrick Gold Corporation (NYSE:ABX) and Randgold Resources Ltd. (ADR)(NASDAQ:GOLD) received an upgraded rating to ‘buy’ from ‘hold’ by analysts at Jefferies. The research firm also upped Kinross Gold Corporation (NYSE:KGC)’s rating to ‘hold’ from ‘underperform’.

The revised outlook comes on the back of improved gold price forecasts by the researchers at the firm. Barrick’s effort to convert its debt into equity through free cash flow has earned it the rating upgrade. Jefferies noted that Kinross’ appears inexpensive at the current gold price and believes it has the potential to perform better from here.

The research firm supported its outlook for Randgold by citing that the company’s liquidity, quality operations, and valuations place it in an advantageous position if gold further moves up in the second half of the year.

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