· Gold slipped on Tuesday due to a stronger dollar, but losses were capped by falling equities after U.S. crude futures plunged below zero for the first time ever in the previous session.
Spot gold eased 0.2% to $1,689.17 per ounce by 0611 GMT, having jumped as much as 1% on Monday as the oil market crash increased safe-haven demand. U.S. gold futures fell 0.3% to $1,706.70.
· “There’s a bit of a tug of war between gold and the dollar at the moment,” IG Markets analyst Kyle Rodda said.
“Gold started to decouple from equities again. We’ve seen a pullback in stocks and it has provided that support for safe havens and a part of that is leading to higher gold and bond prices, and a higher dollar.”
Bullion has on occasion moved in tandem with equities this year, with recent sharp sell-offs prompting investors to sell precious metals to cover their losses elsewhere.
· The dollar rose against key rivals, making gold costlier for investors holding other currencies.
Though U.S. crude oil bounced back into positive territory on Tuesday, the historic plunge has triggered the steepest drop in Asian stock markets in a month.
· Continued risks from the oil market could “provide some level of support for gold as a surge for safety will be put into hyperdrive,” IG’s Rodda said.
However, gold is also used as a hedge against oil-led inflation and a fall in crude prices increases deflationary pressures in the market.
· In the longer term, “falling oil price is disinflationary and thus weighs on gold as one of many factors. (But) gold went up last night as the meltdown in oil inspired safe-haven buying,” said Jeffrey Halley, senior market analyst at OANDA.
Gold prices are expected to consolidate below recent highs during 2020 and 2021 as increased demand from investors for the safe-haven asset is offset by dollar strength and weak retail consumption, a Reuters poll showed.
· On the technical front, spot gold may retest a support at $1,677 per ounce, with a good chance of breaking below this level and falling towards $1,634, Reuters analyst Wang Tao said.
· Gold Price Prediction – Prices Move Higher in Sideways Trade
Gold prices moved higher but continued to consolidate above support near the 10-day moving average at 1,688 . Resistance is now seen near the April highs at 1,747. Target resistance near the August 2012 highs near 1,791. Prices appear to have rebounded at the 10-day moving average at 1,685. Short term momentum has turned negative as the fast stochastic generated a crossover sell signal. This happened as the fast stochastic is printing a reading of 76, coming from oversold levels which could foreshadow a continuation of a correction. Medium-term momentum remains positive and has started to consolidate as the MACD (moving average convergence divergence) histogram is still printing in the black with a declining trajectory which points to consolidation.
· Gold: Below $1,700 as sellers return to desks after Monday’s absence
Only sustained trading beyond $1,700 could recall buyers targeting the latest high surrounding $1,748. Apart from that, sellers can aim for a 21-day SMA level of $1,650.
· Gold Price Analysis: Bears in control as robust resistance looms – Confluence Detector
The Technical Confluences Indicator is facing initial resistance at $1,696, which is the convergence of the Fibonacci 23.6% one-week and the Simple Moving Average 50-4h.
Strong resistance awaits at $1,703, which is a dense cluster of lines including the previous monthly high, the SMA 100-1h, the Pivot Point one-month Resistance 1, and the Fibonacci 38.2% one-week.
Some support awaits at $1,691, which is the confluence of the SMA 5-15m, the Fibonacci 38.2% one-day, the SMA 10-1h, the Bollinger Band 1h-Middle, and more.
Further down, the next noteworthy cushion is at $1,680, where the previous weekly low and PP one-day S1 converge.
· Elsewhere, palladium fell 0.8% to $2,147.53 an ounce, platinum slipped 0.3%, to $768.39 and silver declined 1.1% to $15.21.
Analysts and traders, meanwhile, raised their forecasts for palladium prices, predicting the metal will remain undersupplied even as the virus outbreak hammers auto makers, reducing demand, a Reuters poll showed.
Reference: Reuters, FX Street, FX Empire
Thai
Eng