Spot gold rose 0.2% to $1,506.95 per ounce as of 0700 GMT. U.S. gold futures were up 0.3% at $1,509.60 per ounce.
· “All eyes are on the Fed meeting now, but what investors are really looking forward to is some clarity on whether the central bank will continue to remain dovish for the rest of this year,” said John Sharma, an economist with National Australia Bank, adding that the current take on gold is “wait and see”.
· The Fed is scheduled to meet on Oct. 29 and Oct. 30, with traders seeing a 90.4% chance for a 25 basis point rate cut, according to CME Group’s FedWatch tool. The U.S. central bank has already lowered interest rates twice this year.
· “Gains (if the Fed cut rates this week) may be limited as trade tensions are not as tense as they were over the summer,” AxiTrader market strategist Stephen Innes said in a note.
· U.S. President Donald Trump last week said the U.S. was doing very well in its trade negotiations with China and that China wants to make a deal “very badly.”
The remarks boosted investors’ appetite for riskier assets, sending Asian shares to a three-month high on Monday.
Both U.S. and China have imposed a series of tit-for-tat tariffs over the past 15 months, stirring global recessionary fears and driving gold prices more than 17% higher this year, but the recent development has put a lid on gains.
· However, NAB’s Sharma said “any development on the trade war front will just have an interim effect on gold.”
“The situation is far more complicated to be solved in a hurry.”
· Gold prices were also being weighed by a strong dollar, which makes the metal expensive for buyers holding other currencies.
The dollar index, which measures the greenback against a basket of other currencies, was slightly up on Monday morning after rising nearly0.6% last week.
· Meanwhile, the European Union agreed on Friday to London’s request for a Brexit deadline extension but set no new departure date, giving Britain’s divided parliament time to decide on Prime Minister Boris Johnson’s call for a snap election.
· Gold technical analysis: Bulls testing he 1500s resistance
Gold has been on the up of late, however meeting some pretty strong rejection in the 1520s, a barrier much protected by the bears on the way to the grand target.
Bears have been testing through the commitments of the bear's influence and trendline resistance where it met the 1500 level, a psychologically important number that guarded a run towards the 1520area guarding prospects for a test back to the key 1535 resistance target.
On failures to hold in the 1500s, bears, instead will be looking towards a 50% mean reversion of the late June swing lows to recent highs level around 1460/70.
· Looking to next week, many analysts said that gold has room to move higher as it has made significant technical moves this past week with prices pushing above the 20-day moving average and briefly above the 50-day moving average.
Jameel Ahmad, described gold’s Friday rally as a “technical adjustment.” He added that there is a similar move in oil markets. “There is still some upside left in this move higher in Gold, although it looks like it will face a potential ceiling close to $1535,” he said.
Ole Hansen, head of commodity strategy at Saxo Bank said that he is looking for prices to test initial resistance at $1,525 an ounce in the near-term. He added that Friday’s move broke September’s downtrend, which was a lot shallower than some market players were expecting.
“This shows that there is still an appetite for safe-haven demand but we need to see just how strong it. It’s too early to tell if this move is the start of a new uptrend,” he said. “We continue to see that underlying demand for gold as quite strong and that is a positive sign.”
Afshin Nabavi, head of trading with MKS (Switzerland) SA, said that he remains bullish on gold because the global economy is still a mess and investors are still dealing with massive geopolitical uncertainty. However, he added that investors’ bullish sentiment needs to be kept in check.
“Gold prices can still go higher but we are still stuck in a range,” he said. “If gold faces to break $1,525 then we could see prices fall back to $1,480 very quickly. If resistance does break then we could see prices at $1,575.”
Adrian Day, chairman and chief executive officer of Adrian Day Asset Management, said that he is neutral on gold in the near-term as he doesn’t see any surprise news shaking the yellow metal out of its trading range.
“The Fed will likely cut rates, but that is expected, and the commentary may suggest no further cuts this year. Brexit will continue to be a mess, but that is also anticipated,” he said.
Clive Lambert, technical analyst at Futurestechs, said that the line in the sand for him is $1,509. That is the level gold has to hold above to break its current downtrend. He added that if this resistance level does break then he would expect gold prices to push back to $1,566 an ounce.
· Elsewhere, silver rose 0.4% to $18.09 per ounce. Platinum was up0.2% at $927.73 per ounce, while palladium rose 0.8% to $1,777.08per ounce.
Reuter, Kitoc, FX Street
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