Gold prices edged higher on Thursday as a spike in trade tensions between the United States and China renewed fears of a global economic slowdown and forced investors to seek lower-risk assets.
The spot gold prices edged up by 0.3% to 1,284.32 USD per ounce at 07:00 a.m. ET, having climbed to its highest since April 15 at 1,291.39 USD per ounce on Wednesday. Meanwhile, the gold futures were also 0.3% higher, at 1,285.20 USD per ounce.
The price of gold has been fairly well supported in the last few trading sessions amid the deterioration in the Sino-American trade talks. The broader commodity complex has come under significant pressure because the trade talks seem to be falling apart and we are seeing that rush towards safe-haven assets.
Bullion, along with the Japanese yen and US Treasuries, is seen as an alternative investment in times of political and financial uncertainty. The yen surged to a three-month high against the US dollar, while yields on US bonds fell to 5-week lows.
While gold has drawn support due to risk-averse markets, prices have not been able to register a significant uptrend with the 1,290 USD level further acting as a key technical barrier. The precious metal has struggled to hold bullish gains as the technical overview remains negative. moreover, the analysts expect the precious metal to test the key support of 1,274 USD. If spot gold fails to break resistance at 1,291 USD, it might fall into a range of 1,267-1,274 USD.
Investing in the SPDR Gold Trust, which is the world’s largest gold-backed ETF fund, ended yesterday virtually unchanged near the smallest since October, needing fewer than 740 tonnes of backing despite the trust’s share price rallying almost 1.0% from last week’s drop to new 2019 lows.
Gold premiums in both China and India, relative to quotes in the world’s wholesale hub of London, both eased back on Wednesday after touching multi-year highs last week as US Dollar prices retreated. Shanghai premiums last week touched 25 USD per ounce according to data compiled by the mining-industry backed World Gold Council, the largest incentive for new imports of bullion to the No.1 consumer nation since the immediate aftermath of Donald Trump’s election as US president in late 2016. Gold premiums in India ended last week at almost 15 USD per ounce, their highest since the previous Congress Party government abandoned its near-ban on inflows through the so-called 80:20 rule in late 2014.
Barrick Gold Corp, the world’s second-largest gold producer, on Wednesday said it remained open to new investments, even as it plans to shed 1.5 billion USD of less productive mines.
Among other precious metals, silver was down by 0.2% to 14.81 USD per ounce, while platinum fell by 0.1% to 855.39 USD. Palladium dropped sharply by 1.5% to 1,298.45 USD per ounce, having touched its lowest since January 8 at earlier in the session.
Gold price analysis
The recovery in Gold from near 1,280 USD levels gathered steam last hour, after the risk sentiment deteriorated further on fresh North Korean headlines, sending the rates to near 1,287 USD levels.
Earlier, North Korea fired unidentified projectile eastward from the northwest. The reports boosted the demand for the traditional safe-havens gold, the JPY and US dollar. Despite the latest uptick, the yellow metal remains confined within the recent 15 USD trading range, largely underpinned by the looming US tariff hike on the Chinese goods, effective this Friday.
If today the gold overcomes the resistance range of 1,286.39-1,288.05 USD, it will target reaching and testing the zone 1,294.94-1,295.76 USD. Upon success, the upward trend will continue to 1,298.51-1,300.17 USD.
If the gold falls below the support zone 1,275.93-1,274.27 USD, then the next support will be the zone 1,271.52-1,270.7 USD. In case of a breakthrough, the downward trend will continue to 1,263.81-1,262.15 USD.
Silver price analysis
During trading yesterday, the silver fell from 14.87 USD to 14.82 USD per ounce.
This morning the precious metal traded at 14.81 USD.
If today the silver overcomes resistance zone 14.89-14.91 USD, it will head towards the zone 14.99-15.00 USD. Upon success, the upward movement will continue from 15.04-15.05 USD.
If the precious metal fells below the support zone 14.77-14.75 USD, then the next support will be the zone 14.72-14.71 USD. In case of a breakthrough, the downward trend will continue to 14.63-14.61 USD.