The prices of gold eased on Tuesday, after hitting a one-month high in the previous session, amid fading recession fears and US Treasury yields reduced some of the precious metal’s safe-haven appeal.
The price of spot gold was down by 0.8% to 1,313.55 USD per ounce, after touching its highest since February 28 at 1,324.33 USD in the previous session.
Meanwhile, the US gold futures were down by 0.6% to 1,315.10 USD per ounce.
The analysts started reassessing the inverted yield curve signals, re-evaluating the US and Eurozone data and forecasts for the economic recession. Thus, the optimism on the major stock exchanges returned and the safe haven metals started ending lower.
The 10-year US Treasury yield fell below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve. An inversion is widely seen as an indicator of an economic recession. However, US 10-year Treasury yields edged up on Tuesday, but the outlook remained unclear as investors weighed the odds of whether the US economy is in danger of slipping into recession.
All these factors are moving the gold price up and down during the last days. From today, on the stoplight of the markets enter also Brexit drama, as well as Sino-American trade talks.
Gold prices have gained more than 3% since early March, mainly on the back of a dovish Fed and concerns about a global economic slowdown.
A sharp rally from 1,282 USD towards 1,320 USD price level has created a small trading channel, which indicates that an immediate break should be around 1,326 USD. As long gold does not break the 1,326 USD level, it should be trading in a range of 1,302-1,326 USD per ounce. Any positive developments from either of the geopolitical issues will weigh on gold prices as investors appetite for riskier assets will rise, denting bullion’s safe-haven appeal.
Meanwhile, the daily net flows of SPDR Gold Trust ETF touched 32.877 billion USD assets with reported 123.69 million USD asset inflows for 0.38% increase, which might signal for profitable long-positions on gold.
Among other precious metals, palladium slipped 0.6% to 1,566 USD per ounce, after touching its lowest in two weeks at 1,532.56 USD in the previous session. Silver was down by 0.4% at 15.48 USD, while platinum dipped 0.3% to 852.30 USD per ounce.
Gold price analysis
After rising to its highest level since the end of February at 1,324.50 USD per ounce yesterday, the gold retraced a large part of Monday’s upsurge and was last seen trading at 1,313.55 USD, losing more than 8 USD during the day.
Following the 4-day drop to its lowest level since December of 2017, the 10-year US Treasury Bond yield staged a strong rebound on Tuesday and added more than 1.2% ahead of the NA session to hurt the demand for traditional safe-havens such as the precious metal.
The precious metal is moving down with a target in range 1,312–1,309 USD per ounce. Below this, the important support levels will be 1,306 USD (daily SMA50) and 1,303 USD (daily SMA20), while on the upside the resistance levels will be 1,316 USD (61.8% Fibo rate) and 1,319 USD (38.2% Fibo rate).
The upcoming US data on Housing Starts and Building Permits for the month of February will dictate the gold price, raising or lowering the fears for the economic recession. Despite the pre-emptive calls for a recession, there may be some substance to the prediction, however, not at this time. Although the Fed sees weakness developing in the economy, Chairman Powell still sees pockets of strength and does not foresee a recession.
Furthermore, earlier this week, Chicago Federal Reserve President Charles Evans says the US economy has slowed, but he downplayed chances of a recession.