- Product & Services
- Trading Platforms
- Tools & services
· Gold prices fell on Tuesday for a second session, as hopes of a Sino-U.S. trade deal bolstered the dollar and sparked appetite for riskier assets, blunting investors’ interest in holding the non-yielding bullion.
Spot gold was down 0.2% at $1,506.33 per ounce, as of 0528 GMT, while U.S. gold futures declined 0.2% to $1,508.40 per ounce.
Beijing and Washington have shown signs of progress in trade talks with the Financial Times saying on Monday that the United States is considering whether to drop some tariffs on Chinese goods.
· “The recent hopes of a trade truce between the United States and China have led to the strengthening of the dollar overnight, dragging prices today,” Michael McCarthy, chief market strategist at CMC Markets said by telephone.
The U.S. dollar was close to its highest in almost a week against a basket of rivals on Tuesday, while Asian shares closed in on their July peak, on growing optimism for the United States and China to strike a preliminary deal to scale back their long-drawn trade war.
A stronger dollar makes gold expensive for holders of other currencies.
· “Some positive trade headlines over the weekend and buoyant risk sentiment with equities at all-time highs will be a test of gold’s resilience and market conviction in gold’s uptrend,” UBS strategist Joni Teves said in a note.
Shaving some fears of an upcoming recession, recent data suggests the outlook for the world’s largest economy is not as bad as some had feared, although the U.S. Federal Reserve has cut interest rates three times this year.
After data last week showed U.S. job growth had slowed less than expected in October, investors now await a U.S. ISM non-manufacturing report due on Tuesday that is forecast to show activity accelerated slightly in October.
· “We might see gold hitting the $1,400 level over the next year, given the (positive) growth outlook that is being suggested by the recent economic data,” CMC Markets’ McCarthy said.
However, data on Monday showed new orders for U.S.-made goods fell more than expected in September and business spending on equipment was slightly weaker than initially thought, suggesting that manufacturing remains soft amid the trade war between the world’s two biggest economies.
· Gold has been stuck on either side of $1,500 an ounce for eight weeks and Wall Street analysts are not expecting the trend to change anytime soon even as Main Street remains bullish on the yellow metal, according to the latest results of the Kitco News Weekly Gold Survey.
Some analysts have noted that gold is holding up fairly well because it will take a lot of good news to shift Federal Reserve away from its neutral stance and slight easing bias.
“I think you have to be completely neutral gold right now,” said Ole Hansen, head of commodity strategy at Saxo Bank. “I’m still long-term bullish but I am going to sit on my hands until the chart tells me something different.”
Carsten Fritsch, precious metals analyst at Commerzbank, said that although the gold market is lacking a catalyst to push prices higher, investors shouldn’t ignore the fact that lower-for-longer interest rates make gold an attractive alternative asset because of lower opportunity costs.
He added that in the current environment, gold prices should continue to hold the $1,500 an ounce level.
However, there are some analyst who see further potential in gold because of how it has held critical support in the face positive economic data. David Madden, senior market analyst at CMC Markets, said that he is probably 60% bullish on gold in the near-term.
Adam Button, managing director at Forexlive.com, said that he is also bullish on gold as he sees the Fed’s latest policy stance impacting the U.S. dollar.
“This week, the Federal Reserve basically said it can get a whole lot better and they still wouldn’t raise interest rates,” he said. “I think there is a weak dollar trade out there in the market and that will support gold.”
Looking past U.S. monetary policy, Richard Baker, editor of the Eureka Miners Report, said that he is bearish on gold in the near-term as equity markets continue to trade near record highs.
“The key chart to watch for gold is the gold-to-S&P ratio. The S&P 500 at 3,100 implies a gold price of $1,457,” he said. “Baring a calamitous event, a rising domestic stock market equates to lower gold prices in the near term with a possible bearish trend reversal in the wings.”
· Gold technical analysis: Range play intact amid trade optimism
Gold is currently trading at $1,506 per Oz, representing a 0.17% gain on the day, having faced rejection at highs near $1,515 on Monday.
Prices remain trapped in $1,520-$1,475 range for the fifth straight week. The US and China are closing on the phase-one of a trade deal and forcing a breakout is going to be a tough task for the yellow metal bulls.
Currently, the hourly chart relative strength index is reporting bearish conditions with a below-50 print and the MACD histogram is producing deeper bars below the zero line, signaling strengthening bearish momentum.
Gold, therefore, risks extending losses to the hourly chart support at $1,503 in the next few hours. A violation there would expose the psychological support of $1,500 (200-hour MA).
The outlook as per the hourly chart would turn bullish if prices invalidate the lower highs setup with a move above $1,510.
· Among other metals, silver was flat at $18.06 per ounce and platinum rose 0.3% to $937.97 per ounce, having fallen more than 1% in the previous session.
Palladium was up 0.1% at $1,781.19 an ounce, after falling 1.5% in the previous session.