· Gold eases on stronger dollar, dire economic outlook caps losses
Gold prices edged lower on Thursday as the dollar firmed and investors booked profits, but losses were capped as dour retail sales and manufacturing data out of the United States heightened fears of a steep global recession due to the new coronavirus.
· Spot gold slipped 0.1% to $1,714.55 per ounce by 0302 GMT. The metal had settled 0.7% lower on Wednesday, snapping four straight sessions of gains.
U.S. gold futures rose 0.2% to $1,743.30 per ounce.
There is a lot of profit-taking but the overall upward trend has not changed, said Avtar Sandu, senior commodities manager at Phillip Futures.
· “If you look at the bigger picture, (economic) data is bad, which means you get another few more rounds of quantitative easing, and central banks would definitely keep interest rates low in this weak environment,” he said.
· U.S. retail sales suffered a record drop in March and output at factories declined by the most since 1946, raising concerns that the economy contracted in the first quarter at its sharpest pace in decades as measures to control the spread of the virus weighed.
· Japanese business confidence plunged to fresh decade lows in April, while British retail spending slumped by more than a quarter during the first two weeks of lockdown measures.
· Governments and central banks around the world have unleashed unprecedented fiscal and monetary stimulus and other support for economies floored by the pandemic.
· Lower interest rates reduce the opportunity cost of holding non-yielding bullion. Gold also tends to benefit from widespread stimulus from central banks, as it is often seen as a hedge against inflation and currency debasement.
· World stock markets fell, while bonds and the dollar held on to hefty gains, after a coronavirus-driven plunge in U.S. retail sales and factory production and increasing gloomy economic outlooks for Asia.
· Indicative of investors’ appetite for gold, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4% to 1,021.69 tonnes on Wednesday.
· Palladium gained 1.6% to $2,214.48 an ounce, while silver slipped 0.7% to $15.36 per ounce and platinum fell 0.4% to $776.67 an ounce.
· Gold Price News and Forecast: XAU/USD consolidates gains above $1700/oz.
Gold is lacking a clear directional bias in Asia, having snapped a three-day winning streak with a 0.75% drop on Wednesday. The yellow metal is sidelined near $1,715 per ounce at press time despite heightened coronavirus-led recession fears and the risk-off tone in the global markets.
The US stocks put in a negative performance on Wednesday alongside broad-based losses in the Europen equities. Even so, the safe-haven gold declined, possibly due to the 0.72% uptick in the dollar index, which tracks the value of the greenback against majors. The price action is indicative of markets' preference for the US dollar as a safe haven.
Gold Asia Price Forecast: XAU/USD consolidates gains above $1700/oz.
After breaking to fresh 2020 highs, this Wednesday XAU/USD had a modest consolidation day while trading above the main DMAs (daily simple moving averages) suggesting that bulls remain in full control of this market.
XAU/USD is trading above the main SMAs, making higher highs and lows while holding above the 1690/1700 support zone as buyers are eyeing the 1740 and 1780/1800 levels to the upside. On the flip side, support can be seen near the 1690/1700 price zone and the 1660 level on any retracement down.
Reference: Reuters,FX Street
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