Spot gold fell about 0.4 percent to $1,313.38 per ounce by 0720 GMT, having hit $1,326.30 on Thursday - its highest level since April 26.
U.S. gold futures fell 0.4 percent to $1,316.8 per ounce.
· “The plunge (from Thursday’s peak) came along with fading enthusiasm for safe havens, as U.S. and China are moving to close a deal and many uncertainties surrounding the U.S. government shutdown, Brexit, Fed policy were cleared last week,” said Margaret Yang, a market analyst with CMC Markets.
The U.S.-China trade talks had a “good vibe” with much work remaining, White House economic adviser Larry Kudlow said on Friday, fanning hopes of an end to the long-drawn trade tiff between the world’s two largest economies.
Meanwhile, the dollar was near a one-week high against the yen on the back of robust U.S. jobs data.
· “Upbeat non-farm payroll suggests the U.S. economy is riding a strong momentum, dampening demand for safe-haven assets like gold,” Yang said, adding that this failed to change the market’s view of the Federal Reserve’s dovish stance with regard to its monetary tightening policy.
Despite signs of a robust economy, the Fed is widely expected to keep rates steady this year, thanks to heightened worries over global growth, especially in China and Europe.
· “Investors are now focused on trade talks and what emerges out of those,” said ANZ analyst Daniel Hynes. “Any follow up data that does indicate continued positive economic growth will potentially indicate to people how the Fed will move in the shorter term.”
· Gold trade was subdued with top consumer China closed all week for the Lunar New Year.
· Spot gold may test a support at $1,311 per ounce, a break below which could cause a loss to the next support at $1,299, according to Reuters analyst Wang Tao.
· “I think gold will revisit the band of short-term support at $1,306-$1,310 but remains fairly well supported,” said Nicholas Frappell, global general manager, ABC Bullion.
· Gold Prices May Fall Further as US Data Shifts Fed Policy Outlook
Gold prices fell Friday as January’s unexpectedly strong US jobs and manufacturing ISM data sent yields higher alongside the Dollar, undercutting the appeal of non-interest-bearing and anti-fiat assets.
Looking ahead, data on US durable goods and factory orders enters the spotlight. While both releases are now somewhat dated having been delayed by the US government shutdown, they may nonetheless inform broader growth and Fed policy bets. Improvements are expected on both fronts and US news-flow’s recent outperformance relative to forecasts hints the results may be rosier still.
GOLD TECHNICAL ANALYSIS
Gold prices edged lower after putting in a Shooting Star candlestick on a test of chart inflection point resistance at 1323.60. From here, a push through the dense support layer underpinned by a rising trend line at1287.98 initially exposes the range floor at 1276.50. Alternatively, a break above 1323.60 targets a pivotal top in the 1357.50-66.06 region.
· Many traders and analysts cited a dovish Federal Open Market Committee after a policy meeting this week, in which officials indicated they are pausing in the monetary-tightening cycle while awaiting more economic data. This tends to undermine the U.S. dollar, which helps gold. It also limits the so-called “opportunity” cost of holding non-interest-yielding assets such as precious metals.
Wall Street voters remained bullish even in the aftermath of a strong U.S. jobs report on Friday that normally might hurt sentiment by rekindling rate-hike worries. The Labor Department said U.S. nonfarm payrolls rose by 304,000 in January.
Sixteen market professionals took part in the Wall Street survey. There were 10 votes, or 63%, calling for higher prices. Two respondents, or 13%, said lower, while four, or 25%, said sideways.
Meanwhile, 561 respondents took part in an online Main Street poll. A total of 357 voters, or 64%, called for gold to rise. Another 135, or 24%, predicted gold would fall. The remaining 69 voters, or 12%, see a sideways market.
· Among other precious metals, palladium was flat at $1,350.59 per ounce.
Silver was down about 0.5 percent to $15.84 per ounce and platinum dipped 0.1 percent to $820.74 per ounce.
Reference: Reuters, Kitco
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