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Gold fell to a more than one-week low amid stronger US dollar

The price of gold fell to a more than one-week low on Thursday, pressured by a stronger US dollar.


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The price of gold fell to a more than one-week low on Thursday, pressured by a stronger US dollar. The gold bulls have lost their momentum and the price is threatening the psychological level of 1,300 USD. However, worries over slowing global economic growth and the specter of another US government shutdown kept the safe-haven metal above the key level.

The precious metal extended its losing streak for the fourth session in the previous five and corrected farther from nine-month tops.

The weakness in the gold price is mainly due to the strength in the US dollar index. Fundamentally speaking, there is no clear evidence of why the gold price should be moving lower. The possible explanation behind the current move is that investors are looking at the handsome gains in the equity markets (YTD), and they are more interested in getting their money involved in those asset classes rather than parking it in the safe haven.

Spot gold price fell by 0.1% to 1,304.25 USD per ounce, after touching its lowest level since January 29 at 1,302.11 USD per ounce. The price of the precious metal fell by 0.7% in the previous session in their biggest one-day drop since January 18.

The US gold futures are down by 0.4% to 1,308.70 USD per ounce.

Gold futures

Analysts at JP Morgan believe 2019 could turn out to be an asset-reflation year, courtesy of the Fed’s dovish monetary policy change. As a result, classic safe-haven assets like gold could remain under pressure.

Reflecting lackluster sentiment in gold, the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell for a fourth straight session on Wednesday.

In other metals, the price of palladium was steady at 1,372.45 USD per ounce. Silver was up by 0.1% to 15.68 USD per ounce, while platinum fell by 0.4% to 800 USD.

Gold price analysis

Gold is nearing 1,300 USD support and could soon fall below that psychological support if the US dollar continues to gain altitude. The precious metal is trading at 1,304.25 USD per ounce. The drop from the recent high of 1,326 USD is likely associated with greenback’s five-day winning streak.

During trading yesterday, gold fell from 1,314.87 USD to 1306.34 USD per ounce. If gold overcomes the resistance zone of 1,311.41-1,312.81 USD, it will target the zone 1,318.58-1,319.29 USD. Upon success, the upward trend will continue to 1,321.54-1,322.94 USD.

If the gold falls below the support zone of 1,302.68-1,301.28 USD, then the next support will be the zone 1,299.03-1,298.32 USD. If the downtrend continues, the gold will head to 1,292.55-1,291.15 USD.

Even losing the support of 1,300 USD per ounce, the gold may head down to 1,270 USD.

Venezuela sells its gold reserves

The political crisis in Venezuela continues to affect the price of gold.

Nicolas Maduro’s government has sold 73 tons of gold to Turkey and the United Arab Emirates without the necessary approval of the opposition’s parliament.

The Abu Dhabi Noor Capital investment company has bought 27.3 tons of gold, while a Turkish company bought another 23.9 tons.

Thus, according to the opposition, Nicolas Maduro’s government managed to raise the necessary funds against the US sanctions on oil exports.

By the end of November last year, Venezuela had 132 tons of gold reserves.

Noor Capital said last Friday it had bought another 3 tons of gold on January 21 and will not make more purchases to stabilize the country’s situation.