IGI Securities Limited – Commodity News

Karachi, March 06, 2019 (PPI-OT): Gold

Technical

Gold markets initially tried to rally but then rolled over a bit to reach down to lower levels. This is a market that seems to have a lot of support near the $1275 level. At this point, if it break down below the 200 day EMA, it will probably continue to go lower, perhaps down to the bottom of the overall consolidation at the $1200 level. Investors will continue to look at this market, they will get thrown around, and this could offer plenty of trading opportunities. The real money is going to be for those who can hang onto the longer trade. All things being equal, this is going to have a lot to do with the US dollar, so pay attention to the US Dollar Index. If it falls, that could give us a bit help over here. The 200 day EMA on the downside in the $1300 level on the upside for resistance.

Highlights

Gold prices held close to a more than five-week low yesterday as the dollar firmed and global equity markets held near a five-month crest

Gold prices have fallen nearly 5 percent since hitting a 10-month high of $1,346.73 on Feb. 20

The dollar index held near a two-week high hit in the previous session

A lot of money was parked in gold at the start of the year, waiting for clarity on tariffs

Global growth concerns are a long-term factor and will see some support coming in for gold

Fundamentals

Gold prices steadied today, after recovering from a more than five-week low in the previous session, supported by a pause in global equities’ rally, while a firmer dollar curbed gains.

Spot gold was steady at $1,286.75 per ounce, after slipping to $1,280.70 in the previous session, its lowest since Jan. 25. U.S gold futures were up about 0.3 percent at $1,287.90 per ounce.

Gold is firming after the sharp fall as competing influences of the interest bearing assets are reversing. Bond yields have started to weaken gently, and while the dollar is going up, equities are seeing headwinds.

Gold in longer term is very much supported, partially due to shift in sentiments and global slowdown. In the shorter term, gold continues to show signs of bearish weakness and there is some room to go further south before it resumes its positive trend.

Markets were a bit cautious over the Sino-U.S trade dispute and are awaiting developments in talks between the two major economies after a tit-for-tat tariff war.

Gold is expected to hover above a support at $1,283 per ounce, as it seems to be stabilising around this level. However, gold continues to see downwards pressure from outflows in exchange traded funds and a firmer dollar.

Global equities remained near a five-month high, reducing demand for non-yielding bullion. The dollar stood within striking distance of a two-week high against peers on uplifting signs from the U.S economy and higher Treasury yields.

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