Gold steadies near 2-week peak on growth risks; trade hopes cap gains

Gold steadied on Tuesday, holding near a two-week high hit in the previous session on lingering global growth worries, while an uptick in risk appetite due to U.S.-China trade optimism limited the safe-haven metal’s gains.

Spot gold was mostly unchanged at $1,521.60 an ounce as of 10:54 a.m. ET (1454 GMT), having hit its highest since Sept. 6 at $1,526.80 on Monday.

U.S. gold futures were steady at $1,530.20 an ounce.

“We have a risk-on day, we are seeing some worries on (U.S.-China) trade war escalation ease,” said Chris Gaffney, president of world markets at TIAA Bank.

“Even though trade tensions been eased recently, we still have geo-political tensions; questions about Europe’s economy and tensions in the Middle East, so the safe-haven demand is what’s mainly supporting precious metal prices now.”

Financial markets around the world rose on Tuesday after Washington confirmed that trade talks with China would resume in two weeks.

“Gold could see a temporary headwind if we see a major breakthrough in (U.S.-China trade war) October,” Edward Moya, a senior market analyst at OANDA, said in a note.

“But the mounting geopolitical risks, too much negative yielding debt, and lingering stresses on the Treasury yield curve will keep gold prices supported.”

Tensions in the Middle East have escalated since an attack on Saudi Arabia’s oil facilities this month, with Britain, Germany and France joining the United States in blaming Iran for the attacks. Iran has denied all such allegations.

Concerns over the global economy have continued to mount of late, with a survey out of the Euro zone on Monday showing business growth stalled this month while mixed economic readings out the U.S. added to caution over the prolonged trade war.

Meanwhile, central banks globally face increasing pressure to dole out monetary support for flagging economies as the trade dispute hurts trade and business sentiment.

Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion

Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed ETF, jumped 1.6% to 908.52 tonnes on Monday from Friday.

On the technical side, spot gold could consolidate in a range of $1,489 to $1,566 in the next quarter, as suggested by its wave pattern and a projection analysis, said Reuters technical analyst Wang Tao.

Among other precious metals, palladium gained 0.6% to $1,662.61 an ounce after touching a record high of $1,669.50 earlier in the session..

Silver fell 1.1% to $18.42 and platinum dropped 0.9% to $948.78.

Reuters

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya