The price of gold inched up on Tuesday as investors made purchases after prices touched nearly one-week lows in the previous session, but improved appetite for riskier assets capped bullion’s gains.
The spot gold price had risen by 0.2% to 1,314.10 USD per ounce, having hit its weakest since January 29 at 1,308.20 USD in the last session. The spot gold rose to its highest since late April at 1,326.30 USD last week, after the US Federal Reserve kept interest rates steady and said it would be patient on further hikes amid a suddenly cloudy outlook for the US economy due to global growth concerns and the US-China trade dispute.
Meanwhile, the US gold futures were firm at 1,318.10 USD per ounce.
Gold surrendered a major part of its early modest gains and is currently placed in the neutral territory, around the 1,313-1,312 USD region. The precious metal did attempt to build on the previous session’s late rebound from near one-week lows and gained some positive traction on the back of a mildly softer tone surrounding the US Treasury bond yields. The uptick, however, lacked any strong conviction and a combination of negative forces kept a lid on any meaningful up-move.
Meanwhile, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, dropped 0.50 percent to 813.29 tonnes on Monday. Holdings have fallen for a second straight session.
Among other precious metals, palladium was down by 0.1% at 1,362.73 USD per ounce. The silver rose by 0.3% to 15.90 USD, while platinum was steady at 816.77 USD.
Gold Price analysis
Any meaningful slide below 1,310 USD level is likely to find some support near the 1,303 USD horizontal level and is closely followed by the 1,300 USD psychological level, which if broken might prompt some additional weakness further towards 1,294-1,293 USD support area.
On the flip side, the 1,316-1,317 USD area now seems to have emerged as an immediate resistance, above which the commodity is likely to retest 1,321 USD supply zone before eventually darting towards nine-month tops, around the 1,326 USD region.
The analysts suspect that the high 1,290 USD area and low 1,300 USD area are the new support levels, but we do not expect gold to surge for now. It seems to us that CTAs will need to get more signals before getting more aggressive in the long acquisition, which won’t come until 1,360 USD or so. Meanwhile, despite the fact that the Fed has gone dovish, they could still hike one more time.
Palladium price analysis
The price of palladium, used mainly in pollution-control devices in petrol cars, has almost tripled over the past three years, with a 42% gain since August.
The record palladium prices are lifting the gloom enveloping South Africa’s platinum industry. For South African producers, the rally in palladium is partially offsetting the slump in platinum prices to near a decade low. Combined with a decline in the local currency, which lowers costs for miners selling the metal for dollars, that’s extending a lifeline to companies such as Impala Platinum Holdings Ltd, Sibanye Gold Ltd, and Lonmin Plc.
High palladium prices as the market remains in deficit until around 2024 may eventually encourage vehicle makers to switch to platinum, which is currently largely confined to diesel cars. That would provide a further boost to South African producers.
The precious metal has fallen as much as 7.7% from its record high of 1,439.55 USD reached on January 17. The 55-day moving average is at 1,252.4 USD and prices have been above this average since August 24. There is still a global shortage of the metal and demand is seen increasing, so any downward correction is seen as only temporary.