Gold rose against the slight pause in the US dollar’s rally as the United States and China continue talks aimed at ending their trade conflict. The spot gold was up by 0.3% at 1,312.45 USD per ounce after falling by 0.4% in the previous session.
The US gold futures gained 0.4% to 1,316.70 USD per ounce.
The gold price direction really hinges on how these trade talks play out. A positive outcome at trade talks could weigh on the dollar and that is constructive for gold prices. The trade and geopolitical risks remain to underpin price action and analysts expect this to continue over the near-medium term, with supportive price interest remaining broadly toward 1,300-1,310 USD.
The alternative explanation would be that gold investors have got this wrong. But the fact that gold has so far held above prior resistance circa 1,300 USD, this suggests that the buyers are still in control and that the selling pressure has waned further. Thus, as things stand, gold’s path of least resistance continues to be to the upside, from a short-term technical point of view. If there is a short-term resistance around 1,315 USD break, then this could lead to further technical follow-up buying pressure towards – and possibly beyond – January’s high of 1,326 USD. However, if the 1,300 USD support gives way, then a drop to at least 1,285 USD could be on the cards.
For the near term, gold is expected to stay above 1,300 USD, which is seen as a critical support level in charts followed by technical traders.
Among other metals, palladium was up 0.2% at 1,388.84 USD per ounce while silver gained 0.6% to 15.80 USD. Platinum firmed 0.4% to 784.50 USD per ounce, having touched its lowest since January 2 at 779.50 USD in the previous session.
Contral banks’ demand for gold is the highest since WWII
In recent months, the demand for gold by the central banks is the highest since the Second World War. And this happens against the backdrop of geopolitical risks and a strong dollar stimulating demand for safe protective assets.
A wide range of factors led to the revival of gold demand. They include, in addition to geopolitical risks, fears about rising government debts, as well as the notion that gold brings more energy from a range of other assets.
The experts point out, as a remarkable fact, that for the first time since the end of World War II, demand from central banks has grown tangible.
Gold purchases are rising at almost record levels of the US government debt, which makes some undesirable choices for some other assets.
At present, the yellow metal is traded at about 1,319 USD per ounce, or about 10% more expensive than the bottom, down to its price in September. The forecasts are that demand will continue to grow while deliveries will remain at the current level, pushing the price of gold further.
As with any other commodity, stable demand and weak supply support the price rises. Global demand for gold has risen by 4% and central bank’s demand jumped by 74% to 651.5 tonnes, according to data from the World Council on Gold.