IGI Securities Limited – Commodity News

Karachi, March 28, 2019 (PPI-OT): Gold

Technical

Gold prices fell yesterday as safe-haven buyers sought protection in the U.S Dollar after British Prime Minister Theresa may announced she will step down as the leader of the United Kingdom if her Brexit deal finally secures a majority in parliament. The dollar rose despite another plunge in U.S Treasury yields. The strength in the greenback dampened foreign demand for dollar- denominated gold. The main trend is down and the market isn’t close to turning the main trend to up. This will occur if buyers can take out $1356.00. Gold contract range is $1410.30 to $1189.30. Its retracement zone is $1299.80 to $1325.90. The market is currently trading inside this zone. It is controlling the longer- term direction of gold. The main range is $1356.00 to $1287.50.

Highlights

Gold has gained more than 13 percent since touching more than 1-1/2-year lows last August

A stronger U.S dollar was acting as a headwind to gold

Concerns that the global economy will slow pushed bond yields lower, providing support for gold

The falling yields are reducing the opportunity cost of holding the bullion, which is supportive for gold prices

The falling yields are reducing the opportunity cost of holding the bullion, which is supportive for gold prices

Fundamentals

Gold prices edged up yesterday as weak stock markets and falling bond yields reflected worries about a global economic slowdown and lifted safe-haven assets.

Spot gold was up 0.1 percent at $1,316.61 per ounce, after falling about 0.5 percent on Tuesday. U.S gold futures were also up 0.1 percent, at $1,315.5 an ounce.

The 10-year U.S Treasury yield fell further, having fallen below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve. An inversion is widely seen as indicating an economic recession.

Global equity markets nudged down on Wednesday as investors hoped central bank action in the world’s biggest economies could temper some of the slowdown in global growth.

Gold has gained more than 13 percent since touching more than 1-1/2-year lows last August, on the back of a dovish U.S Federal Reserve and global growth concerns.

The 10-year U.S Treasury yield fell further, having fallen below the yield for three-month bills on Friday for the first time since 2007, inverting the yield curve. An inversion is widely seen as indicating an economic recession.

Stock markets are turbulent and bond yields are coming down on concerns about a slowdown in the global economy. Global equity markets were flat on day, with European stock markets paring most of their early gains.

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