Gold prices fell to their 1-week low after comments from the US Federal Reserve Chairman Jerome Powell, which dashed hopes of a near-term rate cut, boosting the US dollar and bond yields.
Spot gold price fell by 9.46 USD, or 0.74%, to 1,271.93 USD per ounce at 07:30 a.m. ET. Meanwhile, the US gold futures fell by 0.9% to 1,273.05 USD per ounce.
The Fed held interest rates steady on Wednesday but emphasized on the rhetoric that it does not see a readjustment of rates in the near term. Powell’s view on inflation revived an ailing dollar on Wednesday and also prompted US Treasury yields higher. A higher interest rate increases the opportunity cost of holding non-yielding gold and pushes up the dollar and yields, leading to an inverse impact on the price of gold.
Robust US economic releases have eased global growth concerns as equity markets rally above 2018 highs. Strong risk appetites remain a bane for the precious metal. Gold is traditionally seen as a safe place to invest in times of turmoil. The low-interest rates make the metal, which does not offer a yield, more appealing relative to other assets.
Among other precious metals, the silver is up by 0.32% to 14.69 USD per ounce. Platinum prices fell by 0.2% to 862.15 USD per ounce, having touched 853 USD earlier, which is its lowest in nearly a month. Palladium slipped by 0.8% to 1,344.15 USD per ounce, having touched its lowest level since January 25 of 1,309.67 USD in the previous session.
Gold price analysis
The US gold futures are trading at 1,273.05 USD per ounce today. Technically, June futures prices closed near mid-range today.
The bears have the overall near-term technical advantage. A nine-week-old downtrend line is in place on the daily bar chart.
Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at 1,300 USD per ounce. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at 1,250 USD per ounce.
First resistance is seen at last week’s high of 1,290.90 USD per ounce and then at 1,300.00 USD per ounce. First support is seen at today’s low of 1,279.20 USD per ounce and then at 1,275.00 USD per ounce.
Gold demand and consumption
Strategic buying by central banks helped push global gold demand up 7 percent in the first quarter of 2019, the World Gold Council (WGC). They had bought a total of 145.5 tonnes of gold over the January-March period, which is 68% more than a year earlier and follows purchases of 651.5 tonnes in 2018, which was the most in any year since 1967.
The global gold usage during the first quarter gold amounted to 1,053.3 tonnes, up from 984.2 tonnes in the same period in 2018.
The consumption of gold in jewelry industry rose by 1% YoY to 530.3 tonnes. The demand in India rose by 5% YoY to 125.4 tonnes, while demand in China fell by 2% to 184.12 tonnes. China and India are the world’s largest jewelry markets.
Lower purchases of gold bars in China and Japan pushed overall bar and coin investment down by 1% to 257.8 tonnes, although purchases in Britain rose 58% to 3.6 tonnes as investors looked to protect themselves against potential Brexit turmoil.
Gold usage in electronics and other industries fell by 3% to 79.3 tonnes.
Gold price forecast
Gold will average 1,322 USD per ounce this year and 1,369 USD per ounce in 2020, according to a new Reuters poll conducted among 34 analysts and traders showed.
The forecasts were higher than those from a similar poll three months ago which saw averages of 1,305 USD this year and 1,350 USD in 2020.
Gold prices have slipped in recent weeks under the pressure from a stronger dollar, which makes bullion more expensive for buyers with other currencies, and rising stock markets which offer investors better returns.
Helping push gold lower, investors have taken money out of gold-backed exchange-traded funds and ramped up bets on lower prices on the Comex exchange, which now outnumber wagers on higher prices.
But analysts said slowing global economic growth, the increasing likelihood of stock market corrections, a pause in interest rate rises and a likely weakening of the dollar would bring money back to the metal. Gold is traditionally seen as a safe investment during times of uncertainty, as it tends to retain its value while other assets slide.
The gold forecast for this year is 4% higher than last year’s average price of 1,268 USD and would be the highest average since 2013.
Silver price analysis
July silver futures prices closed near the session low and hit a five-month low today.
The silver bears have the firm overall near-term technical advantage and gained more strength today. A nine-week-old downtrend is in place on the daily bar chart.
Silver bulls’ next upside price breakout objective is closing prices above solid technical resistance at 15.25 USD per ounce. The next downside price breakout objective for the bears is closing prices below solid support at the November low of 14.175 USD per ounce. First resistance is seen at $15.00 and then at this week’s high of 15.115 USD per ounce. Next support is seen at today’s low of 14.70 USD per ounce and then at 14.50 USD per ounce.
Silver price forecast
The average price of silver will be 16.05 USD per ounce this year and 17 USD per ounce in 2020, according to the Reuters poll.
Silver is used in industrial applications such as solar panels and electronics as well as for investment and jewelry, so slower global economic growth could depress demand and drag on prices.