Gold edges higher on improved technical outlook

Bengaluru — Gold edged higher on Thursday, supported by an improved technical outlook after scaling key milestones as the market continued to hold out against a stronger dollar.

Spot gold was up 0.2% at $1,224.38 an ounce by 11.38am GMT. US gold futures were flat at $1,227.40.

“Overall, we have been technically breaking above the previous highs, so it will be difficult for gold prices to move below that,” said ABN AMRO analyst Georgette Boele. “I think the overall picture has improved.”

A global stock market sell-off on Monday added some appeal to gold, helping prices to a two-and-a-half-month peak of $1,233.26. Gold has also been testing resistance near the 100-day moving average, around $1,226, with some analysts saying a break above that level could trigger further gains. “The ones getting squeezed now are the shorts,” Beole said.

The dollar index held near a one-week high after the US Federal Reserve minutes from its last meeting reiterated a hawkish stance on monetary policy, normally a bearish signal for gold.

“Gold has held its own pretty well, given that the dollar has appreciated considerably. It received support from further  exchange-traded funds (ETF) inflows,” Commerzbank analysts wrote in a note, adding that sentiment among ETF investors appears to have turned positive.

Holdings of the SPDR Gold Trust, the largest gold-backed ETF, have gained more than 2% since Oct. 3.

“Geopolitical and macro-economic factors are still not indicating exuberance and risk appetite returning to markets with full throttle,” said Religare Securities analyst Sugandha Sachdeva.

Trade-war concerns, a hawkish Fed and recent tensions between the US and Saudi Arabia are among factors likely to weigh on appetite for riskier assets. This bodes well for gold as a hedge against market volatility and a portfolio diversifier, Sachdeva added.

British Prime Minister Theresa May and EU national leaders met on Wednesday to discuss how to deal with their only land border, between the British province of Northern Ireland and Ireland, an issue that has stalled Brexit negotiations.

In other metals, silver fell 0.5% to $14.54 an ounce, having earlier touched its lowest since October 11 at $14.41. Platinum was down 0.1% at $831.10 after hitting a one-week low of $822.75, while palladium gained 0.5% to $1,074. 

Reuters