Gold extends rally as stocks slump triggers safe-haven bids
- Gold extended gains to a second straight session on Wednesday as investors turned to the safe-haven metal after a slump in global equities.
Spot gold rose 0.2 percent to $1,229.30 an ounce by 0034 GMT, after gaining 1.4 percent in the previous session.
Global equity markets tumbled on Tuesday, denting the recent recovery in riskier assets as oil prices fell on signs that a proposed deal to freeze output by major producers was not on the horizon.
Bullion rose along with other safe-haven assets. The Japanese yen climbed to a roughly two-week peak against the dollar, while the Swiss franc rose to a roughly three-week high on Tuesday.
Signs of a slowdown in the global economy and volatile financial markets have led investors to bet against rate hikes any time soon. Prices for U.S. fed funds futures suggest investors see little chance of any increases this year.
The Fed may need to keep U.S. interest rates unchanged for an "extended period" to give inflation time to rise back to the central bank's 2-percent target, Dallas Fed chief Robert Kaplan said on Tuesday.
However, Kansas City Fed President Esther George said the U.S. central bank should consider raising interest rates at its next policy meeting in March. George said volatility in financial markets, if sustained, could give policymakers pause.
- Technically, April gold futures prices are in a two-month-old uptrend on the daily bar chart and the bulls have the overall near-term technical advantage. A bullish symmetrical triangle pattern has formed on the daily bar chart. Bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the February high of $1,263.90. Bears' next near-term downside price breakout objective is closing prices below solid technical support at $1,150.00. First resistance is seen at today’s high of $1,228.90 and then at $1,235.30. First support is seen at the overnight low of $1,207.60 and then at $1,200.00. Wyckoff’s Market Rating: 6.5
Reference: Reuters, Kitco
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