The price of gold is losing positions against the optimism on the world markets and forthcoming British Parliamentary vote for Brexit. The market sare also influenced by the expectations of fewer interest rate hikes in the year by the US Federal Reserve and the Chinese measures for stimulating economic growth.
The price of spot gold had edged down about 0.1% to 1,289.86 USD per ounce, while the US gold futures were 0.1% lower at 1,290.50 USD per ounce.
The precious metals market remain trading in narrow ranges, until seeing some catalyst for the up or down trend. Although the weaker economic data has supported gold prices, if gold can break the 1,298 USD level, 1,300 USD would not be difficult to achieve.
Gold tends to gain on expectations of lower interest rates, as they reduce the opportunity cost of holding non-yielding bullion. Lower interest rates also tend to weigh on US yields and the dollar, in which gold is priced.
Spot gold looks neutral in a range of 1,285-1,299 USD per ounce, and an escape could suggest a direction.
On the daily chart, a golden crossover (a bullish cross between the 50- and 200-day SMA) is almost confirmed. While textbooks refer to it as a bullish pattern, in reality, the crossover represents short-term overbought conditions. This is because it takes a great amount of effort on the part of the bulls to push the 50-day SMA above the 200-day SMA. Put simply, a major part of the rally has already played out by the time the crossover is confirmed.
Consequently, golden crossover confirmation is often followed by a pullback.
Gold, therefore, could see a downside break of the contracting triangle or the bullish breakout, if confirmed, could end up trapping the bulls on the wrong side of the market.
Commerzbank signals for loss of upside momentum in the gold price. There is a small retracement, which would allow for some further collapse near 1,275 USD area and potentially back to the 1,248.50-1,246.63 USD (55-day and 200-day SMA). Here we would expect to see the market stabilize and recover further.
Among other precious metals, palladium inched up 0.1% to 1,324.50 USD per ounce. In the previous session, the metal was trading just below its all-time high of 1,342.43 USD that was reached last week.
Platinum rose by 0.4% to 803.00 USD per ounce, while silver gained 0.1% to 15.63 USD per ounce.
Gold imports to India collapsed in 2018
Gold imports to India have fallen by 20% in the past year after high prices in the country have denied purchasers.
Indian gold imports dropped to 762 metric tons in 2018, a 20% lower than the previous year, according to sources from the customs authorities. The data is not public. Almost all of the gold sold in India is imported. The collapse of the rupee last year made the precious metal more expensive, which affected the purchasing power of the citizens.
In US dollars, gold has been recovering since August, as investors seek protection from market volatility. Compared to a year earlier, the price is 2.8% lower on world markets.
According to Commtrendz Risk Management Services, the demand trend in India has so far been weak, but it is expected in the first half of 2019 to reverse and demand to rise by up to 20% due to increased interest in investment in the metal.