Gold: To grow ongoing global trade uncertainty – OCBC
Recent breakout in Gold prices towards 2942 intra-day high was due to recent play-up on trade friction and central banks keeping up with their Gold purchases (China for 3 rd consecutive month). Gold was last seen at 2892 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Retracement lower is likely
"But near term, there is room for retracement. In a semi-annual testimony to Senate Banking panel overnight, Powell signaled no rush to cut rates. This implies that high for longer may remain and results in higher opportunity cost associated with holding Gold. This comes in timely to keep Gold’s recent rise in check for now."
"Bullish momentum on daily chart intact while RSI eased lower from oversold conditions. Retracement lower is likely. Support at 2860, 2792 (21 DMA). Bias to buy dips. Resistance at 2942 (recent high), 2960 levels. We remain constructive on the outlook of Gold amid ongoing global trade friction/ uncertainty."
"Potential ballooning in US debt may bring back de-dollarisation narrative, adding to demand for Gold. Moreover, continued Gold purchases by central banks is also another driver supportive of Gold prices. Most central banks are still easing monetary policy, albeit at a slower pace. This remains marginally supportive of Gold prices overall."
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FXStreet Insights Team
FXStreet
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