Gold prices retreated slightly from the four-week high reached in the previous session.
Spot gold is down by 0.18% to 1,297.80 USD per ounce at 06:40 a.m. ET, after earlier hitting 1,303.26 USD, which was its highest level since April 11. Meanwhile, the US gold futures were down by 0.2% at 1,298.40 USD per ounces.
Despite the slight retreat, the gold sees good safe-haven demand amid the raising US-China trade war. People are looking to find safe assets in the global equities turmoil, while they wait for the dust to settle. The prices of the precious metals could further rise to 1,310-1,312 USD if stock markets turn back to downtrend. But, any sudden breakthroughs in the trade stand-off possibly could see investors stampeding for the exit as fast as they arrived.
Geopolitical risks are rising, trade tensions escalating, the dollar is down and equities are really under pressure – all these factors are boosting gold prices right now.
On Monday, the metal rose by 1.1% to mark its biggest one-day percentage rise since February 19. The prices broke through multiple technical resistances, which had acted as a barrier for bullion despite the slump in global markets over the past week.
Following the sharp increase, there was some profit-taking in Asia as prices rose above 1,300 USD per ounce. While there remains a high level of uncertainty over the US-China trade negations, bullion should remain supported and requires a consolidated move above 1,305 USD to entice further length back into the market.
The new positive message of US President Donald Trump with expectations Sino-American trade talks to be successful limited the gains of the precious metals, but the high uncertainty keeps the prices high.
The rise in investor interest in bullion was also evident after holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.44% on Monday, its biggest one-day rise in nearly two months.
Among other precious metals, silver edged 0.2% higher to 14.79 USD per ounce, while platinum rose 0.4% to 856.20 USD per ounce. Meanwhile, palladium climbed by 0.5% to 1,329.87 USD per ounce.
Gold price analysis
Gold failed to capitalize on the early uptick to near one-month tops and was now seen retreating farther below the key 1,300 USD psychological mark.
Currently placed at the lower end of its daily trading range, around the 1,297 USD region, the precious metal has now eroded a part of the previous session’s goodish up-move that came after China announced a retaliatory tariff-hike on 60 billion USD worth of US goods.
It took some time and there were some clear feet dragging but eventually gold reacted as you’d expect to yesterday’s stock market sell-off and overall risk aversion, reasserting its position as a traditional safe haven (the notion that it’s being replaced by bitcoin really is ridiculous). A battle around 1,290 USD was fierce at one stage but once it became clear that US investors were not about to buy the dip at the open, gold took off.
The rally took us just above 1,300 USD may reflect in some profit-taking. This is just shy of 50% of the decline from this year’s high in February to the lows in April which makes roughly the 1,300-1,320 USD area very interesting indeed. A rotation around here would suggest the momentum remains with the bears, while a break above could be a good bullish signal.
Gold demand Q1 2019
Gold demand is mainly lifted by central banks and ETFs.
The new quarter is expected to register higher demand for the precious metals against the relatively weak Q1 2018 when demand sank to a three-year low of just 984.2 tonnes.
Central bank buying continue with the global gold reserves grew by 145.5 tonnes. Gold-backed ETFs also saw growth with the quarterly inflows into precious metals grew by 49% to 40.3 tonnes.
Total bar and coin investment weakened a fraction to 257.8 tonnes (-1%), due to a fall in demand for gold bars. However, the official gold coin buying grew 12% to 56.1 tonnes.
Jewelry demand was a touch stronger year-on-year growth to 530.3 tonnes, mainly due to improvement in India’s market.
The volume of gold used in technology dipped to a two-year low of 79.3 tonnes, hit by slower economic growth.
Meanwhile, the supply of gold in Q1 was virtually unchanged, just 3 t lower against Q1 2018 to 1,150 tonnes.
Silver price analysis
During trading yesterday, silver fell from 14.75 USD to 14.74 USD per ounce.
This morning it traded at 14.79 USD per ounce.
If today the silver overcomes resistance zone 14.82-14.83 USD, it will head to 14.89-14.9 USD area. Upon success, the upward movement will continue to 15.01-15.02 USD.
If silver falls below the support zone 14.65-14.63 USD, the next support will be 14.53-14.52 USD area. In the case of a breakthrough, the downward trend will continue to 14.46-14.44 USD per ounce.