Gold prices continue its rise on Tuesday, reaching new maximum levels of almost 6 years. Political and commercial tensions in the world have increased the demand for safe-haven assets, such as precious metal.
Spot gold price rose by 0.3% to 1,515.32 USD per ounce, after hitting its highest since April 2013 at 1,518.03 USD.
The Comex futures for gold with delivery in December on the New York exchange rose by 9.85 USD to 1527.05 USD per ounce. This is the highest level of these quotes since September 2013.
Silver futures with delivery in September were up by 1.27% to 17.29 USD per ounce.
Several factors at the same time contribute to the appreciation of the precious metal – global investors reduce their investments in riskier assets and increase those in safe-haven assets, such as gold. Markets continue to worry about the development of the US-China trade war. It is a pretty straight forward case of risk aversion. The crisis in Argentina and political deterioration in Hong Kong are affecting the equities today. Underlying all of this, global growth is slowing.
Protesters managed to shut down Hong Kong’s airport, the world’s busiest cargo airport, on Monday. The protests, which started as opposition to an extradition bill to mainland China, have expanded into wider calls for democracy.
On the other side of the globe, fears of a possible return to interventionist policies gripped the Argentine market aftermarket-friendly President Mauricio Macri lost by a much bigger-than-expected margin in presidential primaries.
Bullion, along with the Japanese yen and US Treasuries, is seen as a relatively safe investment in times of political and financial uncertainty. The yen stood near a seven-month high against the dollar.
Investors are focused on the Federal Reserve’s annual symposium next week. Traders see a 74% chance of a 25 basis-point rate cut by the Fed this September.
Gold prices must hold above 1,500 USD per ounce for an extension of the bullish wave in the current term.
Reflecting increased investor interest in gold, holdings of SPD Gold Trust, the world’s largest gold-backed exchange-traded fund, jumped by 0.9% to 847.77 tonnes on Monday from Friday.
Spot gold may test a resistance at 1,524 USD per ounce, a break above which could lead to a gain to 1,546 USD.
Among other precious metals, silver climbed by 1.1% to 17.25 USD per ounce, after hitting its highest since February 2018 at 17.36 USD.
Platinum rose by 0.9% to 859.71 USD and palladium gained 0.7% to 1,436.87 USD per ounce.
Gold price analysis
The uptrend may be expected to continue, while gold is trading above support level 1,519.50 USD, which will be followed by reaching resistance level 1,533 USD.
The downtrend will start as soon, as the pair drops below support level 1,519.50 USD, which will be followed by moving down to support level 1,510 USD.
Over the weekend, there were major protests in Hong Kong which shut down the city’s main airport and with the situation threatening to spiral out of control some say it is only a matter of time before China intervenes in the unrest and this is likely to bring things to a whole new level.
“Gold prices have increased further as a weaker CNY sparked the substantial US and global growth fears. With growth worries likely to persist, gold could rise further, driven by an increased ETF allocation from portfolio managers, who continue to under-own gold. We raise our 3, 6, 12-month gold price forecasts from 1,450 USD, 1,475 USD, 1,475 USD per ounce to 1,575 USD, 1,600 USD per ounce, respectively”, said Goldman analysts in a note.
During the week, 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 per ounce. Meanwhile, 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.