- Gold was collecting a safe haven bid on Tuesday as the dollar wilted away.
- Gold is currently trading at $1,284, up from a low of $1,277 and just below the session's high of $1,285.
Gold prices were reversing last week's bearish close as investor concerns over global growth take a grip following the IMF's stark warnings and what appears to be a mixed picture when it comes to Sino/US trade relation progress, a hot topic in Davos this week.
IMF Chair Christine Lagarde cut global growth forecast for 2019 to 3.5 percent from 3.7 percent. Speaking at the World Economic Forum in Davos, Switzerland, she said that high level of economic risks are accelerating around the globe and cited the U.S.-China trade war, Brexit and China's slowing economy as the main culprits.
Us traders returned from a low on weekend to risk-off markets conditions with futures already in the red. During the course of the day, the dollar wilted from its safe haven highs, losing its appeal due to the US government in its 29th day of partial shutdown and weaker US yields, with the US 10 years -1.91% at 2.7320, at the lower end of the day's range of 2.724/2.780.
At the World Economic Forum in Davos, billionaire investor Ray Dalio chastised monetary policymakers for an “inappropriate desire” to tighten faster than the capital markets could handle.
"It is difficult to see what will shake the markets out of their risk-off tone in the near term as lead indicators of growth continue to wane," analysts at ANZ Bank argued.
All eyes on Sino/US relations and US government shutdown
All in all, gold's appeal is likely to continue in such an environment but should there be sentiment of a breakthrough with respect to 'The Wall' and the government shutdown, so long as Sino/US trade tensions continue, (U.S. officials canceled preparatory trade talks this week with two Chinese vice ministers, ahead of a higher-level meeting in Washington later this month), the dollar could well find a bid again and stall the progress of the precious metal. However, if the reflation trade dominates, that is not going to be a good environment for the greenback and gold would likely prevail.
Gold levels
Gold turned around on Tuesday as global markets ran for cover, sending the price back above the 21-D SMA and the closing low at 1277 a dollar above the prior day's low of 1276 which has stolen attention away from the bearish 17th Jan Marubozu Japanese candlestick leaving the price actual in neutral. From a technical outlook, however, the daily MACD is still running negative although RSI is leaning bullish, leaving a mixed outlook.
Support levels: 1279 1273 1269
Resistance levels: 1286 1288 1289
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.0700 as focus shifts to Fed policy decisions
EUR/USD stays in its daily range below 1.0700 after the data from the US showed that private sector employment rose more than expected in April. The Federal Reserve will announce monetary policy decisions later in the day.
GBP/USD holds steady below 1.2500 ahead of Fed
GBP/USD is off the lows but stays flatlined below 1.2500 on Wednesday. The US Dollar holds its ground after upbeat ADP Employment Change data and doesn't allow the pair to stage a rebound ahead of the Fed's policy decisions.
Gold consolidates losses below $2,300, eyes on Fed policy decision
Gold price hovers below $2,300 as uncertainty ahead of the Fed’s policy announcements improves the appeal of the US Dollar and bond yields. The Fed is expected to hold the policy rate unchanged amid stubborn inflation.
A new stage of Bitcoin's decline
Bitcoin's closing price on Tuesday became the lowest since late February, confirming the downward trend and falling under March and April support and the psychologically important round level.
US Federal Reserve Decision Preview: Markets look for clues about interest rate cut timing
The Federal Reserve is widely anticipated to keep interest rates unchanged. Fed Chairman Powell’s remarks could provide important clues about the timing of the policy pivot.