The price of gold held close to a more than five-week low on Tuesday as the US dollar firmed and global equity markets held near a five-month crest, making bullion less appealing for investors.
The spot gold fell by 0.1% to 1,284.63 USD per ounce, close to its lowest level since January 25. The US gold futures fell by 0.2% to 1,285.50 USD per ounce.
Gold prices have fallen by nearly 5% since hitting a 10-month high of 1,346.73 USD on February 20.
The primary driver to gold’s downward momentum is the hope that the US and China will soon agree on a trade deal, which raises the risk appetite of the traders.
Serving as an indicator of investor sentiment in bullion, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rolled backed to mid-December levels with a 0.76% fall on Monday.
Among the other precious metals, palladium slipped by 1.1% to 1,515.61 USD per ounce, spot silver was flat at 15.08 USD per ounce and platinum was traded higher by 0.4% at 838.38 USD per ounce.
Gold price technical analysis
With a daily close above 1,300 USD (psychological level), the gold price could stage a decisive recovery and aim at 1,306 USD (50-DMA) and 1,315 USD (20-DMA).
On the other hand, supports could be seen at 1,283 USD (daily low/March 4 low), 1,276 USD (January 24 low) and 1,266 USD (December 27, 2018, low).
The CCI indicator on the daily chart is climbing toward the -100 mark, suggesting that the pair is in a technical correction phase.
Record cash outflows from gold-backed funds
The price of gold continued to lose value on Tuesday and fell to its lowest level since January 25 near 1,283 USD.
Investors withdraw money from the world’s largest gold exchange-traded fund (ETF) at the fastest pace since more than a year. The main reason is the relieving tensions in trade between the US and China, which makes investors more likely to take more risk and avoid “rescue assets”.
SPDR Gold Trust, which has assets worth more than 33 billion USD, reports net withdrawals of 496 million USD on Friday, the largest since February 2018.
This increased the cash outflows for the past five days of the week to 720 million USD or a fourth consecutive week of negative net flows.
Investors consider the prospect of a trade deal between the US and China as very high and this leads to an increase in risk appetite.
The analysts of Commerzbank AG expect a further decline in gold prices and sustained retention of the metal at levels below 1,300 USD per ounce. Gold is believed to be a safe haven, especially during an expected fall in the market and high volatility.
Index funds monitoring the performance of gold mining companies have also recorded losses recently. The investors have withdrawn 148 million USD from the VanEck Vectors Gold Miners ETF and 142 million USD from the VanEck Vectors Junior Gold Miners ETF last week.
Gold fell for the fourth consecutive day in the spot market on Monday, down by more than 3% from the previous week.
On the first day of the new week, the noble metal was traded at 1,288 USD per ounce.