IGI Securities Limited – Commodity News

Karachi, March 14, 2019 (PPI-OT): Gold

Technical

Gold prices moved higher today pushing through resistance which is now support seen near the 50-day moving average at 1,303. Additional support is seen near the 10-day moving average at 1,295. Resistance is seen near a downward sloping trend line that connects the highs in April of 2018 to the highs in February of 2019 and comes in near 1,345. In the short term, Gold will continue to try to climb from here, as long as it can stay above the $1300 level. There is a significant support level underneath at the $1280 level, an area that had been supportive in the past. At the longer-term, there is a significant support level at the $1200 level, with the $1400 level being massive resistance. Ultimately, it can make a new high then it will go looking towards the $1400 level.

Highlights

Gold rose to a near two-week peak yesterday, holding above the key $1,300

Metals technically have more upside to go just on rising geopolitical uncertainty

Investors are buying into the fact that they are expecting a very dovish U.S Fed announcement

The precious metal has breached the $1,300 threshold represents a positive signal, opening space for further gains

April gold futures last traded at $1,307.40 an ounce, up 0.71% on the day

Fundamentals

Gold hit nearly a two-week high yesterday as tepid U.S economic data reinforced views the Federal Reserve would be patient on monetary policy, with bullion’s appeal also bolstered by uncertainty over a Brexit deal ahead of a key vote.

The gold market is seeing little reaction to the data but continues to hold recent gains. Spot gold gained 0.5 percent to $1,308.83 per ounce, its highest level since March 1. U.S gold futures settled 0.9 percent higher at $1,309.3 per ounce.

The U.S PPI numbers came weaker-than-expected. This, coupled with the Brexit news, is helping gold. Domestic producer prices in the United States rose 1.9 percent on a year-over-year basis in February, the smallest annual increase since June 2017.

Tepid inflation and disappointing producer price data this week support the Fed’s stance of keeping interest rates on hold, denting the dollar and lifting demand for non-interest-yielding gold.

Gold breached the psychologically significant $1,300 level on Tuesday, helped by a weaker dollar, with demand for the U.S currency taking a hit after softer-than-expected U.S February inflation data and falling government bond yields.

On the technical front, gold is now heading towards the next potential resistance around $1313, a former support level. However, if the $1,300 support level gives away again, it could see a more significant sell-off this time around.

Concerns over slowing global economic growth were also bolstering appeal for gold, considered a safe store of value during economic or political uncertainties.

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