· Gold prices fell to a near two-month low on Tuesday, weighed down by a stronger dollar, while hopes of progress in the U.S.-China trade talks lifted equity markets in a further hit to the bullion’s appeal.
· Trading was thin in Asian hours as traders in top consumer China went for a long public holiday.
Spot gold was down 0.4% at $1,465.80 per ounce, as of 0456 GMT, after declining to its lowest since Aug. 6 at $1,462.44 earlier in the session. U.S. gold futures were 0.1% lower at $1,471.80 per ounce.
· The dollar’s potential to gain further and some optimism around a potential trade deal between Washington and Beijing weighed on gold, said Michael McCarthy, chief market strategist at CMC Markets.
· “We also broke through the $1,480-$1,490 support level and on a technical basis that in itself is enough to spur further selling,” he said.
The dollar index against a basket of six major currencies climbed to a more than two-year high, as investors waited for September U.S. manufacturing data to determine how far policymakers will go to bolster growth.
· Asian shares ticked up as some investors clung to hopes that the fourth quarter will bring progress in resolving the U.S.-China trade war that has cast a shadow over the global economy.
· Meanwhile, White House trade adviser Peter Navarro dismissed reports that the Trump administration was considering de-listing Chinese companies from U.S. stock exchanges as “fake news.”
China and the United States are due to resume high-level trade talks next week in Washington. While the tussle over trade and technology between the world’s two largest economies has intensified, some investors are sticking to hopes of a compromise.
· “We’re unlikely to see this rather complex and difficult situation resolve anytime this year ... If both sides appear to accept a partial settlement that could be good news,” McCarthy said.
· On the technical front, spot gold may break a support at $1,462 per ounce and fall towards $1,446, according to Reuters analyst Wang Tao.
· Holdings at SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.22% to 920.83 tonnes on Monday.
With the US Dollar (USD) strength outshining political pessimism surrounding the US and the UK, Gold prices keep it low nearing $1,470 during early Tuesday.
Adding to the yellow metal’s weakness could be the lack of optimism surrounding India and China, two of the world’s biggest bullion consumers whereas receding geopolitical tensions concerning the Middle East might also have strengthened bears.
Technical Analysis
Sustained trading below mid-August low, surrounding $1,480, directs the quote to July 19 high nearing $1,452 before highlighting 100-day exponential moving average (EMA) level of $1,441. It should also be noted that pair’s recovery beyond $1,480 will have to cross multiple resistances around $1,485 to confront 21-day EMA level close to $1,500 round-figure.
The Elliott wave gold price forecast suggests further corrections ahead. We can count an incomplete bullish trend still in play that is simply going through a corrective dip. We can also count a longer-term top in that points towards new lows below $1000. It is difficult to identify which pattern may have the upper hand.
If the bull trend takes over, the corrective dip may find support near $1450 and possibly as low as $1375. Gold prices do not need to fall that far in order for the bull pattern to kick in. That is what makes the Elliott wave pattern on gold tricky. The risk to reward ratios don’t exist at this point on the charts. At lower levels, the behavior of gold will tips its hand.
Bottom line, wait for price action to develop further and see if bullish patterns emerge at $1375-$1450.
· Gold has risen faster than anticipated, but fundamentals still leave room for price growth, said Nolan Watson, CEO of Sandstorm Gold.
“I think all of the fundamentals are still backing it in a massive way and I would say for the first time in my life, I’m willing to say something along the lines of, two to three years from now, gold will be over $2,000 an ounce,” Watson told Kitco News on the sidelines of the Denver Gold Forum.
· Platinum was down 0.1% at $881.37 per ounce. Silver was 0.1% lower at $16.97, after hitting its lowest since Aug. 20 at $16.87 earlier in the session.
Reference: Reuters,Daily FX, FX Street,Kitco
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