Gold hits fresh six-year highs near $ 1535 amid flight to safety


  • Argentine crisis, Hong Kong protests and global growth woes boost safe-haven Gold.
  • Gold bulls cheer Increased odds of a September Fed rate cut.
  • Focus shifts to US CPI report for fresh trading impetus.

Gold (futures on Conex) extends its bullish momentum into a second straight day on Tuesday, having found a strong support near $ 1500 mark a day before.

Gold glitters amid market panic and unrest.

The yellow metal sits at the highest level since April 2013 at 1535.55, as investors flock to safety amid mounting risks over a number of global factors such as escalating tensions around Hong Kong demonstrations, Argentine currency crash, Italian political risks and global economic slowdown.

Amid the above concerns and lingering US-China trade war fears, market seeks to protect their capital in the safe-haven assets like gold at the expense of the higher-yielding assets such as equities, Treasury yields, oil etc. The Treasury yields across the curve have turned negative in tandem with the US equity futures, having stalled their Asian pullback.

Further, increased odds of a September Fed rate cut also continues to keep the US rates undermined, lending support to the non-interest-bearing gold. Markets see a 74% chance of a 25 basis-point rate cut by the Fed this September while they eagerly await next week’s Kansas Fed’s Jackson Hole Symposium for fresh hints on the US interest rates outlook.

In another evidence of increased investors’ confidence in the precious metal, the holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, jumped 0.9% to 847.77 tonnes on Monday from Friday, as cited by Reuters.

In the near-term, the global uncertainties will play out and will remain the main risk to the broader market sentiment, which will continue to underpin the demand for the safety bet. Also, the US CPI report is expected to have a major impact on the inflation-hedge, gold.

Gold key levels

    1. R3 1553.95
    2. R2 1536.22
    3. R1 1523.66
  1. PP 1505.92
    1. S1 1493.36
    2. S2 1475.63
    3. S3 1463.07

 

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