Gold prices rose on Tuesday, hovering close to their 1-week high touched in the previous session, as the US dollar fell amid the weak US economic data, with the metal gaining further support from higher oil prices.
Spot gold was up by 0.3% to 1,300.47 USD per ounce. The precious metal touched an intra-day high of 1,303.61 USD per ounce, highest since March 28, in the previous session.
The US gold futures were up by 0.1% to 1,303 USD per ounce.
The US nonfarm payrolls data on Friday signaled for a slowdown in wage growth and job cuts in the manufacturing sector even as employment accelerated. The decline in wage inflation takes the pressure off the US Federal Reserve and lets it remain dovish and delay rate hikes or maybe switch gears, and that’s supportive for gold.
Lower interest rates reduce the opportunity cost of holding the non-yielding bullion. Investors are now awaiting minutes of the Fed’s March meeting, due on Wednesday.
The gold price is also supported by continued buying from central banks. China, which is the world’s biggest gold consumer, raised its gold reserves by 0.6% to 60.62 million ounces by end-March.
Turkey also raised its gold holdings by 17.11 tonnes to 495.86 tonnes in March, while Ecuador revised its January figures by 10.58 tonnes to 16.95 tonnes, according to data from the International Monetary Fund.
Meanwhile, holdings in the world’s largest gold-backed exchange-traded fund (ETF), SPDR Gold Trust, fell for a sixth straight session to 760.49 tonnes on Monday.
Among other precious metals, the spot price of platinum slipped by 0.2% to 903.13 USD per ounce, after touching its highest level since end-May 2018 in the previous session.
Palladium was up by 0.2% at 1,386.10 USD per ounce, while silver inched higher by 0.1% to 15.25 USD per ounce.
Gold price analysis
During the trading yesterday, gold rose from 1,291.49 USD to 1,297.14 USD per ounce.
This morning it is traded at 1,300.47 USD per ounce.
If today the gold overcomes the resistance range of 1,303.26-1,303.36 USD per ounce, it will target reaching and testing the zone 1,309.53-1,309.58 USD per ounce. Upon success, the upward trend will continue to 1,315.50-1,315.60 USD per ounce.
If gold falls below the support zone 1,291.12-1,291.02 USD per ounce, the next support will be the zone 1,285.10-1,285.05 USD per ounce. In case of a breakthrough, the downward trend will continue to 1,278.88-1,278.78 USD per ounce.
The technically important 100-day moving average held late last week, as it did in early March, thereby lending support to the price.
What is more, prices at around 1,280 USD per ounce, the lowest seen so far this year, appear to be generating buying interest on the market and preventing prices from sliding any further. Gold is also likely to have received tailwind this morning by remarks made at the weekend by US President Trump, who harshly criticized the US Federal Reserve’s interest-rate policy once again. As well as calling for rate cuts, Trump even demanded quantitative easing.
Silver price analysis
During trading yesterday, the price of silver rose from 15.08 USD to 15.22 USD per ounce.
This morning the precious metal is trading at 15.25 USD per ounce.
If today the silver overcomes the resistance range of 15.31-15.32 USD per ounce, It will head to the resistance area of 15.39-15.40 USD per ounce. Upon success, the upward trend may continue to 15.50-15.51 USD per ounce.
If the silver falls below the support zone 15.12-15.11 USD per ounce, the next support will be in the range 15.01-15.00 USD per ounce. In the case of breakthrough, the downward trend may continue to 14.93-14.92 USD per ounce.
Gold price forecast
Gold prices are likely to tick higher into early next year, according to the latest analysis of the French bank Societe Generale. They expect the gold price to progressively rise over the year as investors seek refuge from risk assets going into a recessionary period in 2020.
According to the experts from Societe Generale, the gold price will average 1,400 USD per ounce in Q1 2019.
The monetary U-turn of the Fed and the ECB in recent weeks also offers some respite to non-yielding assets. As we no longer expect the Fed to raise rates this cycle, and with the ECB on perpetual hold, the real rates are likely heading near zero, if not negative, which should make gold relatively easier to carry in a portfolio.