· Gold rose on Monday as investors’ appetite for riskier assets faded on concerns about a potential U.S. recession and decelerating global growth, increasing appeal for the bullion alongside yen and bonds.
Spot gold was up 0.2 percent at $1,315.98 per ounce as of 0610 GMT, while U.S. gold futures gained 0.3 percent to $1,315.70 an ounce.
The metal last week posted its third consecutive weekly gain and rose 1 percent, the most since the week ended Feb. 1.
· Investors dumped shares and fled to the safety of bonds, while the Japanese yen hovered near a six-week high.
· “Market is in a risk aversion mode. It seems that the data from Friday night, of U.S. and Europe, didn’t come as expected,” said Michael McCarthy, chief market strategist, CMC Markets.
Data on Friday showed that U.S. manufacturing activity unexpectedly cooled in March and businesses across the euro zone performed much worse than expected this month, fanning concerns on global growth.
“If data continues to be as weak as forecast then there is very good chance we could see significant higher gold prices,” McCarthy said, adding that the inversion of yield is a sign of concern.
· Yields on benchmark U.S. 10-year treasury notes fell further below three-month rates in Asia, an inversion that has in the past signalled the risk of economic recession. The yield curve inverted on Friday for the first time since mid-2007.
· Chicago Federal Reserve Bank President Charles Evans said on Monday that it is a good time for the U.S. central bank to pause and adopt a cautious stance, adding that he did not expect any interest rate hikes until the second half of next year.
· “Gold is set to make another run for the $1,350 price level that has proved resilient,” OANDA said in a note.
“Volatility fuelled by uncertainty and with plenty of Fed speakers expected to reinforce the dovish rhetoric from the central bank, the U.S. dollar will be limited on the upside.”
· Indicating appetite for the safe-haven bullion, holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose about 1 percent in the previous week.
Investors also raised their bullish wagers in COMEX gold in the week to March 19, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.
· Trading View | Gold’s weekly outlook: Mar 25-29, 2019
Gold had a third consecutive green week with closing happening above previous week’s highs. As the fundamental data around the world unravels, its getting clearer that recession and growth fears might come true which inturn will push up the demand for the yellow metal thus new highs cannot be ruled out. We have 2 scenarios –
1. Gold closed above the support, till this is held it can move towards $1318. Once this is crossed it can rally to $1327. If this is taken out it can move till $1341.
2. Short trades are still not valid given the price movement which is extremely bullish . They come into picture once the support gets broken for the targets of $1284 and $1273.
· Wall St., Main St. Look For Gold To Shine After Fed Meeting
Seventeen market professionals took part in the Wall Street survey. Twelve participants, or 71%, described themselves as bullish for the week ahead. There were four voters, or 24%, who see sideways prices, while just one respondent, or 6%, called for a retreat.
Meanwhile, 572 respondents took part in an online Main Street poll. A total of 387 voters, or 68%, called for gold to rise. Another 127, or 22%, predicted gold would fall. The remaining 58 voters, or 10%, saw a sideways market.
· Weekly Gold Price Forecast: Channel Provides Guide for Longs & Shorts
Gold continues its 2 steps forward, 3 steps back ‘rally’, if you can call it that. The upward grind has a clear channel structure coming into view, one which can be used whether you are operating form the long or short-side of the tape.
Overall, the grind smacks of a corrective move of the down-move off last month’s high, but as long as the lower parallel of the channel is respected then the short-term trend remains tentatively bullish. How high gold could go is hard to say with the way momentum is lacking. There is minor resistance around 1320/21.
A break, however, and things will likely change quickly. A drop through the lower parallel will bring into play the neckline of a head-and-shoulders pattern and a pair of lows surrounding 1280 that make up the neckline. It’s not the prettiest pattern, but sometimes it’s the semi-sloppy ones that work the best.
The immediate focus is on the channel. From a tactical standpoint, both longs and shorts can use the lower parallel as a guide for making decisions. These clean technical structures can be looked to for assessing downside risk on bullish bets and timing for would-be shorts seeking confirmation that momentum may have shifted lower.
· Bill Baruch, president of Blue Line Futures, said that although gold is suffering because of continued strength in the U.S. dollar, he sees long-term potential for gold as bond yields push lower.
“Gold is going to work higher and its time to shine will come, you just have to be patient,” he said. “Lower yields are the long-term fuel for gold.”
· Among other precious metals, palladium slipped 0.1 percent to $1,562 per ounce.
Silver gained 0.3 percent to $15.46, while platinum was up 0.5 percent at $847.99 an ounce.
Reference: Reuters, Daily FX, FX Street
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