Spot gold was up 0.1 percent at $1,231.81 an ounce at 0420 GMT. On Tuesday, it touched its highest since July 17 at $1,239.68.
U.S. gold futures were down 0.2 percent at $1,234.7 an ounce.
• "Gold has benefited from general equity weakness, short covering, and rising risk aversion ... There is potential for further upside amid rising risk aversion and geopolitical risk," said John Sharma, an economist with National Australia Bank (NAB).
• "Weakness in U.S. equities will neutralize the haven appeal for U.S. dollar, playing into gold's hands," said Stephen Innes, APAC trading head at OANDA in Singapore.
"Risk aversion is in play. The difference this time around is the U.S. dollar does not have a go-to haven appeal it had from escalating trade war tension."
• Meanwhile, Atlanta Federal Reserve President Raphael Bostic said on Tuesday that falling stock prices, uncertainty around global trade and other possible "headwinds" are not enough yet to throw the U.S. economy off course or force the Fed to alter its intent for continued gradual rate increases.
"At this stage, the Fed will be monitoring factors such as the U.S. labour market and inflationary pressures. However, stock market weakness and possible yield curve inversion might induce some caution," NAB's Sharma said.
• Spot gold may retest a resistance at $1,238 per ounce, a break above which could lead to a gain into the range of$1,252-$1,263, according to Reuters technical analyst Wang Tao.
• According to Amit Kumar Gupta, portfolio management services head at Adroit Financial Services in New Delhi, "gold will continue to find support in $1,210-$1,215 region, the previous breakout level. On upside, $1,245-$1,252 can be achieved in next couple of weeks amid U.S mid-term elections uncertainty."
• Silver rose 0.3 percent to $14.77 per ounce, while platinum was down 0.3 percent at $828.24.
Palladium was down 0.1 percent at $1,139.50 per ounce after hitting an all-time high of $1,150.50 in the previous session.
• For the first time since April 26, gold has closed above its 100-day moving average. Although gold closed well off of the intraday high, it did manage to close above the 100-day moving average for the first time in six months. Gold prices surged to a high of $1,243before backing off, and as of 4:20 PM Eastern standard time, gold futures are currently fixed at $1,233.20, which is a net gain of $8.60 (+0.70%) on the day.
one week after gold prices surged above the 50-day moving average, which signaled the real possibility that gold had entered a short-term bullish mode.
The fact that gold closed above its 100-day moving average signals the real possibility that, on an intermediate basis, gold is in a bullish trend.
• Gold prices could be in store for the “mother of all short-covering” rallies, said one analyst, citing CFTC short positioning and the yellow metal’s strength in the face of higher U.S. dollar.
Even $1,500 is not out of the realm of possibilities, according to ThinkMarkets chief market analyst Naeem Aslam, who sees the latest CFTC data as a positive sign for gold prices.
“The recent CFTC data showed that hedge funds have decided that it is about time for them to start scaling back from their short position. This sends a strong bullish signal for the metal,” Aslam wrote in a report published on Monday.
• The gold market has suffered under the weight of rising U.S. interest rates and a stronger U.S. dollar, but one bank sees a shift coming as equity markets have seen increased selling pressure this this past month.
Analysts at Bank of America Merrill Lynch (BAML) said that in this current environment they see gold prices pushing to $1,400 an ounce by the end of 2019. Along with their long-term bullish call, the bank also recently disclosed a January long call option position on the world’s largest gold-backed exchange traded fund SPDR Shares Gold, (NYSE: GLD) with a strike price at $117.
“So far, US real interest rates have been rising due to a rapid Fed tightening path and muted inflation. In turn, a combination of higher US real rates, a robust USD, and muted equity market volatility have pushed gold down this year,” the analysts said in their report. “However, equity markets are already sowing the winds of change and a rising VIX will eventually force the Fed to slow down.”
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