Gold prices rose for a third consecutive session on Tuesday as the US dollar weakened on expectations that the US Federal Reserve will maintain a dovish tone at its monetary policy meeting this week.
The spot gold was up 0.4% at 1,308.80 USD per ounce as on 12:30 GMT. Meanwhile, the US gold futures rose by about 0.3% to 1,309.07 USD per ounce.
The prices are likely to trend higher going ahead, but investors need to be cautious and should not believe the bull-run in gold has begun till the prices convincingly break above the 1,400 USD per ounce mark.
Gold prices had a strong start to the year, mounting an impressive February rally, they have erased most of those gains, now up less than 1% for 2019 versus the S&P 500′s 12% rise.
The other precious metals are also on the rise with silver appreciating by 0.42% to 15.42 USD, while palladium and platinum are up by 1.08% and 1.06%, respectively.
Precious metals have received strong support from the depreciation of the US dollar. Investors sold the dollar before the Fed’s two-day meeting this week, which is expected to reaffirm the patient policy of the reserve.
Gold price analysis
After closing the previous day with small gains, the gold price fluctuated in a tight range above the critical 1,300 USD handle before gaining traction and advancing to a daily high of 1,309 USD in the last hour.
The precious metal’s EMAs have reached an inflection point. It seems as if they are moving into a bullish stack where the green 5-day EMA will be above the orange 13-day EMA, and the orange 13-day EMA will be above the black 34-day EMA. We note that the RSI(9) is above 50 an indicative of underlying bullish momentum.
In regards to the near-term future, most likely, the yellow metal will break the medium pattern line to surge to the 1,310.00 USD level.
If the gold overcomes the resistance zone of 1,311.06 – 1,311.16 USD it may target to 1,315.52 – 1,315.73 USD. Falling below will see support in the zone 1,298.67 – 1,298.46 USD. In the case of breakthrough, the downward trend will continue to 1,290.14 – 1,289.93 USD.
Palladium with a new record of over 1,600 USD per ounce
The expectations for a patient Fed have sent the US dollar down and respectively the prices of the precious metals upwards.
Palladium reached a new historic record after rising momentarily to the highest value of 1,603.30 USD per ounce. The metal rose by more than 2% and swapped at levels of 1,596 USD per ounce. Palladium is already almost twice as expensive as platinum.
Since last week, palladium has been gaining momentum in commodity markets, following the news that Russia is considering a temporary ban on exports of precious metal scrap.
This has fueled the fears of an even deeper shortage in the supply of the metal, which is the core of its appreciation. Otherwise, palladium is mainly used in gasoline vehicle catalysts. It has become an even more demanding raw material, after the reduced demand for diesel cars.
Still, investors in palladium should be very careful. The metal trades 40% above its 200-day simple moving average, as well as nearly 20% above its 50-day moving average, which may be a sign of its overpricing.