- Risk-off flows ramp up the demand for the precious metal this week.
- Broad USD weakness supports the XAU/USD pair's rally.
- US-China trade conflict, concerns over currency war lift gold.
After starting the week at $1,412, the troy ounce of the precious metal rose to its highest level since April 2013 at $1,510 before spending the last trading day of the week in a consolidation phase. As of writing, the XAU/USD pair was virtually flat on the day at $1,500.
Gold puts a smile on investors' face
Surprise rate cuts by the Reserve Bank of India and the Reserve Bank of New Zealand concerns over the potential impact of a prolonged US-China trade war on the global economy and fears of an all-out currency war forced investors to seek refuge throughout the week.
Major global equity indexes suffered heavy losses, strong demand for Treasury bonds weighed on the yields, and the precious metal capitalized on the risk-off atmosphere as a traditional safe-haven. Commenting on the market conditions, “We believe gold remains relevant given the elevated economic and geopolitical risks. Investors will continue to shift their strategic portfolio positions in favour of gold,” said ANZ analysts.
“Safe-haven flows continued to build in gold, with ETF holdings rising to six-years high of 2393t. Further, central banks bought 374.1t of gold, as emerging markets tried to diversify their reserves.”
On top of the rising demand for gold, the broad USD weakness this week supported the pair's rally. With US President Trump aggressively calling upon the Fed to cut rates and the US 10-year Treasury bond yield slumping to its lowest level since October 2016, the US Dollar Index is looking to post a weekly loss of around 0.6%.
Technical levels to watch for
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 regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.