Gold steadies above $1310 on global growth concerns
Date | 11-02-2019 - 09:49 AM
Article Type | Commodities
Region | World
Gold could remain better bid in the near-term on renewed trade tensions and global growth concerns.
Technical charts favor a test of recent highs above $1325, although dollar strength could play a spoilsport.
Gold has steadied above $1310, after rallying for two days straight on global growth concerns.
The yellow metal printed a low of $1302 on Thursday, before rising to $1314. The bounce was likely triggered by uncertainties around Sino-US trade war and concerns of slowing global economic growth.
Last week, the European Commission sharply downgraded 2019 Eurozonegrowth forecast, triggering fears of a recession in the core Eurozone economies.
Further, trade tensions resurfaced after U.S. President Donald Trump said that he had no plans to meet with Chinese President Xi Jinping before a March 1 deadline to achieve a trade deal. It is worth noting that Trump has vowed to hike tariffs on $200 billion worth of Chinese imports to 25 percent if the two sides fail to reach a deal by 12:01 am on March 2.
The yellow metal, therefore, could trade on the offensive in the near future. Technically speaking, Friday's move to $1314 confirmed an expanding falling wedge breakout on the 4-hour chart. Put simply, the pullback from the recent high of $1326 has likely ended and the bulls appear to have regained control.
The upside, however, could be capped by the strength in the US dollar. The dollar index, which tracks the value of the US dollar against majors, rallied for a seventh straight day on Friday and is currently flat-lined around 96.64.