Spot gold was steady at $1,462.50 per ounce as of 0445 GMT after hitting its highest level since May 2013, at $1,474.81, earlier in the session.
U.S. gold futures were down 0.1% to $1,475.30 an ounce.
“There have been comments that China is going to use its currency tool a bit more, because they are beginning to lose their trade deal with the U.S., ” said John Sharma, an economist with National Australia Bank.
· U.S. Treasury Secretary Steven Mnuchin said on Monday the government had determined that Beijing was manipulating its currency, and Washington would engage with the International Monetary Fund to “to eliminate the unfair competitive advantage created by China’s latest actions”.
This comes after China allowed its yuan to weaken past the key 7-per-dollar level for the first time in more than a decade, following Washington’s decision to impose 10% tariffs on $300 billion of Chinese imports, ending a month-long trade truce.
Helping gold’s momentum, the dollar index slipped to a two-week low, while U.S. longer-dated Treasury yields posted their biggest fall in 14 months.
The fresh escalations in the protracted trade war between the U.S. and China rattled financial markets around the world, driving investors towards safe-haven assets.
· “The market sell-off could still see another major push lower and that will likely be the catalyst to take gold above $1,500 an ounce,” Edward Moya, senior market analyst at OANDA, said.
“The deteriorating global economic outlook is likely to see stronger easing signals from all the large central banks and that should keep bullion demand high.”
· Indicative of sentiment, holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose 0.53% to 835.16 tonnes on Monday from Friday.
· Meanwhile, gold priced in sterling soared to a record high on Monday, spurred by fear of a disorderly British exit from the European Union amidst trade tensions.
· On the technical side, spot gold may fall into a range of $1,441-$1,449 per ounce, according to Reuters technical analyst Wang Tao
· Gold nears $1475 as bulls keep benefiting from risk aversion
Be it a spoiling case of the US-China trade tussle or North Korea’s repeated missile test, not to forget tensions concerning the Middle East and global central bankers’ monetary policy easing, Gold has it all to remain strong around multi-year high. The yellow metal is currently trading near $1472.60 before rising to $1474.95, fresh tops since May 2013, during early Tuesday.
Technical Analysis
While May 2013 high near $1,488 and $1,500 round-figure are likely immediate resistances on the bulls’ radar, sellers can look for $1,435 rest-point on the break below $1,453.
· Gold Soars On Safe-Haven Demand; More Upside Likely
Technically, December gold futures prices closed nearer the session high today. The bulls have the strong overall near-term technical advantage and gained more power today. Bulls have restarted a nine-week-old uptrend on the daily bar chart. Gold bulls' next upside near-term price breakout objective is to produce a close above solid technical resistance at $1,500.00. Bears' next near-term downside price breakout objective is pushing prices below solid technical support at last week’s low of $1,412.10. First resistance is seen at today’s high of $1,481.80 and then at $1,490.00. First support is seen at $1,467.00 and then at $1,454.00.
· Gold’s Next Target Is $1,500 As Trade War Escalates: MKS PAMP Group
Gold prices are starting the week with solid gains, driven by a currency war between the U.S. and China, MKS PAMP Group writes in a note. “The fact that the PBOC did not defend the 7.00 handle was viewed as a clear signal that China is willing to go toe-to-toe with the U.S. on trade, resulting in a firm risk off session across Asia to see regional equities sharply lower,” MKS says. The next target for gold is $1,500 an ounce, according to the note. “Gold firmed on the currency moves, pushing above USD $1,450 post-Yuan fix … From a technical perspective, the strength above USD $1,450 should now allow for a further extension of the recent strength, with initial targets extending to USD $1,500.”
· Chinese Gold Output Is Down 5% In First Half Of 2019
China’s gold output is down 5.05% at 180.68 tonnes in the first half of 2019, according to the China Gold Association. The decline is due to “environmental clampdowns and deepened supply side reform,” writes BMO Capital Markets managing director of commodities research Colin Hamilton. “Gold consumption fell 3.27% y/y to 523.54t in 1H19, as consumption in jewelry increased 1.97% y/y to 358.77t, while consumption in gold bars dropped 17.29% y/y to 110.51t,” Hamilton says. Also being noted by BMO is China’s central bank adding gold to its gold reserves. “China add[ed] 74.03t to its gold reserves, which now stand at 1,926.55 [tonnes]. The People's Bank of China has added to its reserves for 7 consecutive months.”
· Among other precious metals, silver edged 0.1% higher to $16.41 per ounce, and platinum rose 0.2% to $854.99.
Palladium climbed 1.3% to $1,433.42 an ounce.
Reference: CNBC, Daily FX, FX Street
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