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Gold eases back after surge above $1,500

Published : Friday, 9 August, 2019 at 12:00 AM  Count : 153

Aug 8: Gold eased slightly on Thursday after a surge above $1,500 for the first time since April 2013 in the previous session in response to US-China trade uncertainties and growing signs of an economic slowdown.
Spot gold was down 0.3per cent at $1,496.52 per ounce at 1015 GMT.
US gold futures fell 0.7per cent to $1,508.30 per ounce.
"Given how aggressively gold has gained quite in the past few days, it's only natural for prices to retrace before pushing back higher," FXTM analyst Lukman Otunuga said.
The metal has risen more than 17per cent so far this year, and about $100 over the past week, in a stellar run propelled by trade tensions and an increasingly dovish shift in policy by central banks amid fears of slowing growth.
"The situation has not changed. Political tensions continue to exist, the trade war is still going on, so I would not be surprised to see higher prices" said Afshin Nabavi, senior vice president at precious metals trader MKS SA, adding prices could move in a $1,475- $1,530 range in the absence of any further catalysts.
Global stock markets enjoyed a tentative recovery following sharp falls in response to an escalation in the trade war, when China allowed the yuan to weaken beyond the key 7 yuan per dollar mark, viewed as a retaliation to a US threat of additional tariffs.
"Any reconciliation signal between Trump and China could send investors back to riskier assets," ActivTrades analyst Carlo Alberto De Casa said in a note. But other factors, including a lower interest rate environment, was likely to keep safe-haven bullion supported, analysts said. On Thursday, the Philippine central bank cut its benchmark lending rates, following similar moves by New Zealand, India and Thailand, among others.
Following the US Federal Reserve's rate cut last week, interest rates futures suggest traders are betting the Fed will cut rates three more times by the year-end to avert a recession.
In another tailwind for gold, US 10-year Treasury yields dropped further below three-month rates, an inversion that has reliably predicted recessions in the past. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 1.02per cent to 845.42 tonnes on Wednesday.     -Reuters

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