Gold price slips after failure to break technical resistance
London (April 5) Gold slipped from one-month highs on Wednesday after failing to break technical resistance at its 200-day moving average for a third time, but appetite for safe-haven assets ahead of a meeting of U.S. and Chinese leaders limited its losses. Spot gold <XAU=> was down 0.2 percent at $1,252.70 an ounce at 1050 GMT, while U.S. gold futures <GCcv1> were 0.3 percent lower at $1,254.90 an ounce. Gold touched $1,261.15, its highest since Feb. 27, on Tuesday but failed to close above its 200-day moving average, currently at $1,258, for the third time in less than six weeks. "The failed consolidation above the 200 DMA has no doubt hit investor confidence, however we do still continue to see solid interest for the metal at current levels," said Sam Laughlin at MKS PAMP.
Investors are poised to push gold higher, said Georgette Boele at ABN AMRO. "Upward momentum is getting stronger. It looks like the market is not willing to give up yet." Gold has risen 8.8 percent so far this year and has held just under its 200-day moving average since late March. Investors are hesitating to make sure there are no negative surprises for gold in U.S. employment data due on Friday and the minutes from the most recent U.S. Federal Reserve meeting to be released later on Wednesday, Boele said. Hawkish signals from the Fed would undermine gold prices because higher interest rates lead to higher bond yields and dampen demand for non-yielding bullion.
Sharp falls in unemployment would bolster the case for rate rises and likely boost the dollar, making gold costlier for holders of other currencies. The dollar was flat on Wednesday, while U.S. bond yields were slightly higher. Gold was also underpinned by demand for safe assets after North Korea fired a ballistic missile into the sea ahead of a summit between U.S. President Donald Trump and Chinese President Xi Jinping on Thursday and Friday. However, if gold dies break above resistance it would likely stall at around $1,275 due to expectations of U.S. rate hikes later this year and a strong dollar, said ABN AMRO's Boele. "You will see some upward momentum but not runaway action," she said. In other precious metals, spot silver <XAG=> was down 0.4 percent at $18.21 an ounce, having touched a one-month high of $18.41 in the previous session. Platinum <XPT=> advanced 0.4 percent to $962.21 an ounce, while palladium <XPD=> was up 0.5 percent at $808.80.
Source: Nasdaq
