Gold prices edged lower on Thursday as investors locked in profits before this week’s US non-farm payrolls data and as a rally in stock markets briefly halted the metal’s recent strong run.
The price of spot gold declined by 0.3% to 1,414.95 USD per ounce as of 06:30 a.m. ET. The US gold futures were down by 0.2% to 1,417.70 USD per ounce.
Wall Street are closed for a holiday and the gold market was less liquid with investors focussed on Friday’s US non-farm payrolls for indications on rate cuts from the Federal Reserve’s July meeting. The economists expect non-farm payrolls to have risen by 160,000 in June compared with 75,000 in May.
The investors are already very long on gold, but it has still not pushed to new highs. The markets expect news from the business and financial sector, which possible will change the trends in the price of the precious metal. Expectations of a dovish approach to monetary policy globally, have driven inflows into gold. Lower interest rates tend to make non-yielding gold more attractive to investors.
Bullion hit a six-year high last week at 1,438.63 USD per ounce, driven by a dovish outlook from major central banks and an escalation of tensions between the United States and Iran.
On the technical front, spot gold may retest a resistance at 1,435 USD per ounce, leading to gains in the 1,443-1,456 USD per ounce range.
Among the other precious metals, silver was down by 0.1% at 15.28 per ounce, and platinum rose by 0.1% to 837.50 USD per ounce.
Palladium dipped by 0.7% to 1,560.95 USD per ounce. The metal touched an over three-month peak of 1,574 USD on Wednesday.
Gold price analysis
Gold trades below key resistance zones as it looks to follow through lower on the back of its price rejection.
On the downside, support comes in at the 1,408 USD level where a break will turn attention to the 1,400 USD level. Further down, a cut through here will open the door for a move lower towards the 1,390 USD level. Below here if seen could trigger further downside pressure targeting the 1,380 USD level.
Its daily RSI is bearish and pointing lower suggesting more weakness.
Conversely, resistance resides at the 1,420 USD level. Further out, resistance resides at the 1,430 USD level where a break will aim at the 1,440 USD level. A turn above there will expose the 1,450 USD level. Further out, resistance stands at the 1,460 USD level. All in all, the gold looks to weaken further on corrective pullbacks.
Russia raises its gold at the expense of the dollars
For years Russia has been one of the biggest bulls in terms of the price of gold – even when the appreciation was lulling, it continued to increase its reserves. Now the price of gold is the highest since 2013, and Moscow’s tactics seem to pay off.
The domination of the US dollar as a leading reserve currency is under pressure. Recently, however, Russia has set an example of how a major economy with the world’s fifth-largest international reserve may reduce its dollar holdings. So far, the country has not many followers, but the purchase of gold by central banks is on the rise.
Since being subject to sanctions for the annexation of the Crimean Peninsula in 2014, Russia has a good reason to rethink the composition of its international reserves. And while the European Union has not tightened its sanctions for five years, the US is doing this constantly.
In the 12 months since the end of September 2017, the central bank cut more than half its dollar holdings in its foreign exchange reserves and sharply increased the shares of the euro and the Chinese yuan.
According to the latest data from the Russian Central Bank, the share of gold in reserves is slightly decreasing, although Russia has added 274 tonnes to its holdings in 2018, bringing the total to 2,113 tonnes. This is because the other assets of the bank are also rising, embodying Moscow’s efforts to isolate itself from the pressure of the West. That’s because this year the price of gold fell by 7%.