Gold prices gained modestly on Tuesday after the steep fall in the previous session, as investors fretted about an economic slowdown amid weak global manufacturing data and the US-European trade tensions.
The spot gold price was up by 0.7% to 1,392.34 USD per ounce at 06:30 a.m. ET, after falling by 1.8% on Monday, which was its biggest one-day percentage decline since November 2016. The US gold futures were up by 0.5% to 1,395.70 USD per ounce.
Last month, gold prices grew by 8% rising above 1,400 USD. The prices of the precious metal 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.
Yesterday, the data showed that manufacturing activity slowed last month, weakening appetite for risk. Factory activity shrank across much of Europe and Asia in June, while growth in manufacturing cooled in the United States, keeping the world’s monetary policymakers under pressure to avert a recession.
The trade conflict is back to the focus today and the participants have shifted from US-China trade war to US-EU tensions. The United States on Monday ratcheted up pressure on Europe in a long-running dispute over aircraft subsidies, threatening tariffs on 4 billion USD of additional EU goods, on top of products worth 21 billion USD that was announced in April.
The support level of 1,380 USD per ounce was able to push up prices despite the correction. Supportive price action should be evident towards 1,380-1,375 USD, the extension through to 1,360 USD is likely to provide entry levels for fresh bullish positioning. Moreover, the analysts are again reporting for inflows into ETF’s following the decline below 1,400 USD. Investors are still confident that the US Federal Reserve will cut rates in the next few months. As far as that holds we can see gold rise above 1,400 USD.
Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.78% to 800.20 tonnes on Monday.
Among other precious metals, silver was up by 0.1% to 15.19 USD per ounce, while palladium rose by 0.3% to 1,553.40 USD per ounce. Platinum gained 0.7% to 835.65 USD per ounce, after touching a near seven-week high on Monday.
Gold price analysis
Gold regained positive traction during the Asian session on Tuesday, albeit remained well below the key 1,400 psychological level.
In a knee-jerk reaction to a trade truce between the US and China, the precious metal opened with a bearish gap and subsequently dropped to over one-week lows on the first trading day of the week.
The price of the yellow metal has faced a battering of long Dollars following the weekend’s news and trade cease-fire. This has taken the precious metal off multi-week highs and throws a monkey-wrench in the works for the bulls. Bears can now target the 20-D EMA and then the 50% retracement of the April swing lows to late June swing highs.
The precious is consolidating above 1,386.15 USD. Today, the pair may start a new growth to reach 1,398.30 USD and then form a new descending structure with the target at 1,375.40 USD. After that, the instrument may start another correction towards 1,407.33 USD.
Other important levels for the day are 38.2% Fibonacci retracement rate, which sits at 1,388.09 USD, as well as a 61.8% Fibonacci retracement rate at 1,391.83 USD.
The daily SMA20 is 1,364.74 USD, daily SMA 50 is 1,316.59 USD, while the daily SMA100 is 1,309.89 USD.