Gold prices rebound today adding 0.31% at $1,487.91 after yesterday’s sharp drop below the $1,500 mark. Optimism around an upcoming phase one deal between China-US has boosted risk appetite and drove traders away from safe-haven assets such as JPY and gold. Stronger than expected U.S. ISM service manufacturing PMI also contributed to golds drop as the USD jumped to three -week highs.
The world gold council reported yesterday that India’s gold demand is forecasted to drop by 8% to around 700 tonnes – the lowest level since 2016. India’s gold consumption in 2Q fell to 123.9 tonnes.
Investors expect that Fed is likely to pause interest rate cuts after delivering three-straight rates cuts earlier this year. Low U.S. benchmark interest rate pressures the dollar and bond yields, increasing the demand for non-yielding metals, like Gold.
The ECB in it’s last meeting kept interest rates unchanged and continued its bond repurchase program of €20billion per month.
The gold price selloff yesterday breached below the 50 and 100-day moving averages and also send the price below the ascending trendline which started back in June. On the downside, first support for gold now stands at $1,482.17 today’s session low and then at $1.479 yesterday’s low, a close below that support line might have negative implications and might attract more bears that will drive the price down to $1,474 the 100-day moving average.
Gold has established strong support at $1,458 October low. The precious metal remains well supported by weak global economic data, low-interest rates environment and tensions in Syria and Middle East.
On the upside, first resistance would be met at $1,488.72 today’s top while a move above will open the way for a move up to 1,493.91 the 20-day moving average below an attempt to return above the $1,500 mark.More content