Gold prices rose on Tuesday 2nd April, mainly from the escalation of trade tensions and a sharp fall in demand for risky assets. China has announced additional tariffs on 128 US products, which led Gold to trade up the whole week, attracting lots of hedge funds into the asset. At present, spot gold is trading at $1,334/oz, 0.6% for the week.
Lukman Otunuga, a research analyst at FXTM, believes that gold prices may continue to rise in the short term, while $1340/oz is the key short-term resistance for gold.
"Global trade tensions could motivate market risk and have a negative impact on the dollar," added Otunuga, "therefore gold looks likely to maintain its high levels before the non-farm employment report scheduled for Friday (6th April)."
According to the data released by the American Association for Supply Management (ISM), US manufacturing PMI in March was 59.3, lower than 60.8 in February. 60 was expected. Although the data were not as good as expected, the dollar index rose slightly after the data was released. The price of gold had not been greatly affected, and further decline in US stocks boosted the price of gold.
Jasper Lawler, a CMC market analyst, said gold is still optimistic. "The stock market is expected to struggle in the environment of increased volatility. When we see that the stock market continues to weaken, gold will become active."
RBC Wealth Management managing director George Gero predicts geopolitical uncertainty will continue to support gold prices. In addition, investors are beginning to be cautious about the bond market, which will bring pressure to the USD. As investors shy away from bonds and stocks, people's attention has returned to gold.
However, physical gold demand is still in the doldrums. American Mint sales data show that in March, the U.S. Mint American Eagle gold sales fell to their slowest March Sales ever, and silver prices fell to the lowest level in 11 years.
Data in March shows that the mint sold 3,500 ounces of gold, which was 36.3% lower than that of 5,500 ounces in February. This year, gold demand has dropped by 83.3% compared with that in March 2017, when it sold 21,00 ounces of gold.
Meanwhile, the US Mint sold 915,000 U.S. Eagle Silver Coins in March, down 2.9% from 942,500 in February. This year, silver sales decreased by 43.3% compared with that in March 2017, when it sold 1,600,000 ounces.
ETF securities investment strategy director Maxwell Gold said that despite long bullish gold, if gold wants to break through $1,400, it needs to see a signal that demand for real gold is warmer.
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