Spot gold was up 0.1 percent at $1,316.09 per ounce as of 0419 GMT.
U.S. gold futures were also up about 0.1 percent at $1,315.70 an ounce.
· "Investors are very cautious on Treasury yield curve inversion, which had proven many times as early signal for a recession," said Margaret Yang, a market analyst with CMC Markets, Singapore.
Yang said the falling Treasury yields gave market sufficient reason to take some hedging measures, which along with weaker-than-expected U.S. data supported the non-interest bearing gold.
· U.S. homebuilding fell more than expected in February, while consumer confidence ebbed in March, offering more evidence of a sharp slowdown in economic activity early in the year.
· Asian shares slipped on Wednesday, giving up small gains made the previous day as investors tried to come to terms with a sharp shift in U.S. bond markets and the implications for the world's top economy.
Though benchmark 10-year note yields were steady above their lowest level since December 2017, the yield curve was inverted by around four basis points.
Uncertainties around Brexit are also increasing bullion's safe haven appeal, analysts said. The next Brexit vote is due later in the day.
The Sino-U.S. trade negotiations scheduled to start on Thursday in Beijing are also watched keenly.
· "There is a strong hurdle at higher levels close to $1,325 per ounce mark which may lead to some consolidation in gold prices," said Sugandha Sachdeva, vice-president, metals, energy and currency research, Religare Broking.
"But once that is taken out convincingly, further run-up in prices towards $1,350 per ounce looks plausible."
Limiting gold's gains was a stronger U.S. dollar, which rose 0.2 percent to its highest in two weeks.
"We need to pay attention to U.S. dollar strength which is negatively correlated to gold. If dollar continues to strengthen that could put pressure on gold," Yang said.
· GOLD TECHNICAL ANALYSIS
Gold prices stalled below resistance at 1326.30. A reversal lower from here that takes out support in the 1303.70-09.12 area may set the stage for confirming a choppy Head and Shoulders top formation by exposing the pattern’s would-be neckline, now at 1282.16. Closing below the latter level would imply a significant bearish reversal to follow. Alternatively, a piercing of resistance targets the February top at 1346.75.
Selling pressure in gold silver and palladium, (platinum is the exception trading higher on the day) seems to be technically based for the most part, as well as a percentage of today’s decline in response to the treasury yield curve in version which is truly a rare occurrence. The reason that analysts are concerned about this is the last time the yield curve inverted was in 2007 which of course preceded the banking crisis and following the recession.
However, it must be noted that this inversion was temporary as it occurred for a brief moment in time on Friday. Nonetheless it does trigger fears that the global economic slowdown could have a dramatic effect on the U.S. economy.
· On a technical basis we still remain bullish on gold pricing. Considering that gold has contained a higher high than the previous week, and a higher low than the previous week for the last four consecutive weeks.
Add to that the last three consecutive weeks have all contained gains when viewed from Monday’s open to Friday’s closing price. Currently although the gains are only fractional, we could see this be the fourth consecutive week in which we have a net gain.
Key levels that need to be watched basis the April Comex contract are the .23% Fibonacci retracement which occurs at $1313.90. The next key support level that must hold if we are going to maintain a bullish demeanor is pricing holding above its 50-day moving average which is currently at $1308 40. Currently, April futures are fixed at $1315.20.
Resistance is composed of the two former tops achieved this year with the first one occurring at $1331, and the highest trading points of the year $1350 as being absolute resistance. Should those price points be challenged and surpassed, we will likely see follow-through buying challenging the multiple set of tops that have been the brass ring and sit at $1370.
· Among other precious metals, palladium gained 0.3 percent to $1,544.60 per ounce.
Silver was flat at $15.43, while platinum was up 0.6 percent to $860 an ounce.
Reference: Reuters, Daily FX, FX Street
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