· Gold prices dipped on Friday as investors booked profit after the European Union forged a new Brexit deal with Britain, though a floor was kept under prices by uncertainties over trade negotiations and the global economy.
Spot gold edged down by 0.1% to $1,490.05 an ounce at 0722 GMT. U.S. gold futures fell 0.4% to $1,493.
· “Considering the present uncertainties around the U.S.-China trade war and other geopolitical risks, gold still has potential upside,” said Hareesh V, head of commodity research at Geojit Financial Services, attributing the slight price dip to profit-taking.
· The European Union backed a new Brexit deal with Britain on Thursday, which prompted an uptick in Asian shares in early trade. However, gains were capped after disappointing Chinese economic growth data.
While markets promptly cheered progress in talks, doubts erupt if Prime Minister Boris Johnson will be able to secure the UK parliament’s backing for the agreement if he is to take Britain out of Europe on Oct. 31.
· “The Brexit deal did not have as much a negative impact on gold as expected. This means that there are still concerns that it might not get passed in the parliament,” said Brian Lan, managing director at dealer GoldSilver Central in Singapore.
“Gold will be range-bound until and unless we have some clarity on Brexit and other geo-political risks,” Lan said adding that he expects gold to trade around $1,475 and $1,503 per ounce in the short term.
· Worries surrounding a trade war between the United States and China still lingered, with China’s economic growth slowing more than expected to 6% year-on-year in the third quarter, the weakest pace in almost three decades.
The world’s two-largest economies have imposed tariffs on each other’s goods in a dispute over China’s trade and industrial policies that has slammed the brakes on global economic growth. Gold is often used at such times as a hedge against uncertainty.
· The dollar index at a near eight-week low has also lent support to the metal.
· ANZ Bank said in a note it expects gold to receive support from elevated macro and geopolitical risks, with under-supplied PGM (platinum group metal) prices likely to push higher.
“The palladium market is still structurally tight, keeping prices resilient with intermittent volatility.”
· Gold technical analysis: 200-bar SMA, six-week-old trendline exert downside pressure
Despite trading in a small range, Gold’s upside has fewer odds due to the key resistances standing untouched while the quote seesaws near $1,492 during early Friday.
Among the upside barriers, 200-bar Simple Moving Average (SMA) level of 1,503 and a falling trend line since September 04, at $1,510 now, comes nearby.
Should prices rally beyond $1,510, monthly top and 61.8% Fibonacci retracement of September-October declines, around $1,518/19, could question buyers targeting $1,535 and $1,557 numbers to the north.
Meanwhile, a downside break below 23.6% Fibonacci retracement level of $1,479.50 can take aim at $1,465 and month’s low of $1,459.
· GOLD TECHNICAL ANALYSIS
Gold prices broke support guiding them higher since late May. It is unclear at this point whether the subsequent choppy pullback marks a slow start to an emerging downtrend or the formation of a bullish Flag continuation pattern. A daily close below 1480.00 exposes the 1439.14-46.94 area. Alternatively, a push above resistance at 1535.03 targets the 1557.10-63.00 zone (September high, weekly chart inflection level).
· Amongst other precious metals, palladium rose 0.1% higher to $1,760.67, a day after hitting a record high of $1,783.21 an ounce. The autocatalyst metal was up 3.6% for the week, and set for its best since the week of Sept. 13.
Platinum shed 0.2% to $885 per ounce while silver inched 0.1% higher to $17.54.
Reference: Reuters, FX Street, Daily FX
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