Gold extended gains on Thursday after climbing 1% in the previous session, as concerns that an inversion in the US government bond yield curve was signaling recession fuelled interest in the metal as a haven from risk.
At the day’s peak of 1,523.91 USD per ounce, gold was back to within 11 USD of Tuesday’s six-year high, hit on fears of a global downturn as investors fretted over a US-China trade war, unrest in Hong Kong and a slide in emerging-market assets. Spot gold was up by 0.2% at 1,519.71 USD per ounce by 06:30 a.m ET, while the US gold futures were up 0.2% at 1,530.60 USD.
Spot gold has gained over 8%, or more than 100 USD, since the beginning of the month amid the heightened trade tensions and a slew of disappointing economic data globally.
The analysts see gold could rise to as much as 1,580-1,600 USD over the remainder of the year and risks are skewed to the upside and would not rule out a temporary breach of the upper end of that range.
An inverted yield curve was cited as driving investors away from risk assets and into the safe-haven metal. Global markets fell after the yield on the 30-year US bond hit an all-time low, while the yields on the German 10-year bund and the French 10-year OAT marked fresh record lows in negative territory.
The analysts see a flight to safety with market confidence being a bit shaky. The US economy is showing signs of weakness and it is starting to slow in the second half of this year, which is supportive for gold. On the flip side, gold’s bull run is going on for some time and in the short-term, there might be some pullback, corrections, and people locking in profits.
The US yield curve was inverted for a second straight trading session on Thursday. The yield curve inversion, which has historically signaled a looming recession, triggered an extensive flight to safety. Fears of a global recession gripped financial markets around the world as stocks slumped to more than two-month lows on Thursday, tracking a Wall Street slide.
Economic data from China and Germany suggested a faltering global economy, hit by the worsening US-China trade war, Brexit and geopolitical tensions. Gold, which pays no interest of its own, is often used as a hedge against political and financial risks.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.9% to 844.29 tonnes on Wednesday.
Elsewhere, silver rose by 0.3% to 17.26 USD per ounce. Platinum dipped 0.1% to 839.33 USD per ounce and palladium was 0.1% higher at 1,425.77 USD.
Gold price analysis
An uptrend of the gold will start as soon, as the pair rises above resistance level 1,522 USD, which will be followed by moving up to resistance level 1,534 USD. A downtrend will start as soon, as the pair drops below support level 1,510.80 USD, which will be followed by moving down to support level 1,497 USD.
Weekly, the uptrend may be expected to continue, while pair is trading above support level 1,489 USD, which will be followed by reaching resistance level 1,522-1,532 USD.
The downtrend will start as soon, as the pair drops below support level 1,488 USD, which will be followed by moving down to support level 1,470 USD and 1,446 USD.