Gold eases on technical selling

Bengaluru — Gold slipped on Thursday, pressured by technical selling after repeatedly failing to breach $1,300 this week, though US sanctions on Chinese telecoms company Huawei dented risk appetite and limited bullion’s losses.

Spot gold was down 0.2% at $1,294.31/oz at 10.27am GMT, holding in a relatively narrow range of about $4.

US gold futures were down 0.2% at $1,294.90.

“We have seen repeated attempts in the last few days to rise above $1,300 and it [gold] appears to be facing some kind of barrier. There is clearly some selling when it hits that level,” said Capital Economics analyst Ross Strachan, adding that trade tensions and global economic growth concerns continue to offer support for bullion.

European stocks fell and government bond yields slipped after the US government hit Huawei with sanctions, further straining Sino-US trade ties.

The latest move from Washington tempered hopes of a breakthrough in an escalating trade conflict that has rattled financial markets and compounded fears of a slowdown in global growth after weak economic data from China.

“Gold seems to have reached a temporary detente at these levels with momentum too weak to push it either way. The geopolitical premium appears to be baked into the price for now,” Oanda analyst Jeffrey Halley said in a note.

On the technical front, spot gold is expected to test resistance at $1,307, a break above which could lead to a gain to $1,322, said Reuters technical analyst Wang Tao.

Meanwhile, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said holdings fell 0.4% to 733.23 tons on Wednesday. Holdings are now close to their lowest levels since October 9.

Among other metals, silver edged 0.1% higher to $14.80/oz while platinum fell 0.4% to $842.65.

Palladium lost 0.6% to $1,336.60 and has slumped by about 17% since the metal used in catalytic converters in car exhaust systems scaled a record peak of $1,620.53 in March.

“At the movement it [palladium] seems to be consolidating after a hefty decline,” Strachan said. “The bigger picture for palladium is still substantial weakness in autos demand.”

Reuters