Gold prices edged higher on Thursday as the weak US inflation data raised expectations that the Federal Reserve will pause rate hikes this year, while investors were looking for developments in trade talks between Washington and Beijing.
Spot gold was up by 0.2% to 1,308.66 USD per ounce. The US gold futures were down by 0.2% at 1,311.80 USD per ounce.
Lower interest rates reduce the opportunity cost of holding non-interest bearing gold and weighs on the dollar. According to the analysts, a jump above 1,325 USD could trigger a new climb.
There is a dense layer of technical support for gold around 1,294-1,307 USD.
The gold prices touched a more than one-week high of 1,318.12 USD on Wednesday, but pared gains in the late session on the dollar’s strength.
The US dollar benefited from sustained strength in core US inflation. In the latest 12-month period, the so-called core CPI rose 2.2% for a third straight month.
The giant gold-backed ETF the SPDR Gold Trust saw more outflows on Tuesday and has now shrunk on 7 of this month’s 8 trading days so far, with investor interest falling by 3.0% as bullion prices have held in a 20 USD range above 1,300 USD per ounce. While major gold Exchange Traded Funds (ETF) tracked have eased more than 1%, mirroring a slight pullback in gold since the start of this year, the ETFs have risen about 5% since mid-August, tracking a roughly 13% gain in gold in the same period.
Gold prices have risen nearly 13% since touching more than 1-1/2-year lows in mid-August, mostly on expectations of a pause in interest rate hikes and tumultuous stock markets.
Elsewhere, palladium slipped 0.36% to 1,398 USD per ounce. Platinum was down 0.25% to 784.50 USD per ounce, while silver was 0.41% lower at 15.64 USD per ounce.
Gold technical analysis
Gold edged higher through the early European trading session and is currently placed at the top end of its daily trading range, just below 1,310 USD level.
The precious metal managed to regain positive traction on Thursday and recovered a part of the previous session’s rejection slide from the 1,315 USD supply zone, albeit remained well within this week’s broader trading range.
Any subsequent up-move might continue to confront stiff resistance near the 1,315-1,316 USD region, above which the commodity is likely to aim towards testing 1,321 USD supply zone en-route multi-month tops, around the 1,326 USD level.
On the flip side, the 1,305-1,304 USD region now seems to have emerged as immediate support and is closely followed by the key 1,300 USD psychological mark, which if broken might prompt some additional weakness towards 1,295-1,294 USD support area.
China raises gold reserves
China is adding to its gold reserves again, boosting holdings for a second month and reinforcing an outlook from bulls including Goldman Sachs Group Inc. that central-bank buying will likely remain strong this year.
The People’s Bank of China raised holdings to 59.94 million ounces, or about 1,864 metric tons, by the end of January from 59.56 million ounces a month earlier, according to data on the bank’s website. In tonnage terms, it added about 11.8 tons last month after taking in just under 10 tons in December, which was the first time the PBOC had boosted its hoard since October 2016.