Gold falls as economic data weakens demand for save-haven bullion

Bengaluru — Gold prices fell on Tuesday to hover near their lowest in more than a week, as positive economic data from major economies stoked risk appetite, softening demand for safe-haven bullion.

Spot gold was down 0.3$ at $1,284.53 an to $1,281.96, its weakest since April 4. US gold futures shed 0.3% to $1,287.40

“It’s a question of risk sentiment in financial markets. Equities are up, which is putting pressure on gold, traditionally seen as a safe haven,” Julius Bär analyst Carsten Menke said. “We’ve seen positive data out of China lately. That really supports the view of an improvement in the Chinese economy as well as the global economy, in turn supporting risk sentiment.”

China reported better-than-expected credit and export figures last week that allayed concerns regarding the pace of economic growth.

Jobs data from the US last week also assuaged concerns that the world’s largest economy was losing momentum, with the number of Americans filing applications for unemployment benefits dropping to a nearly 50-year low.

Stock markets edged higher as the reassuring Chinese economic data helped investors shrug off disappointing bank earnings in the US, while volatility in European markets took another leg lower.

“Longer-term bulls are tentatively on the bid above $1,280,” said Stephen Innes, head of trading and market strategy, SPI Asset Management. “But given we are in the very early stages of a possible global growth-inspired risk revival, prices remain precariously perched above significant support level as downside momentum continues to build.”

Positive news on US-China trade talks, as well as the absence of any large global geopolitical issues, have taken some sheen off bullion, analysts said.

Gold prices were trading below key technical support levels including the psychologically significant $1,300 mark, seen as negative bias, analysts and traders said.

“Gold now sits firmly underneath the 100-day moving average at $1,289, with the figure now an important pivot, while the January-February lows between $1,280 and $1,283 should see supportive interest,” MKS PAMP Group said in a note.

Holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund (ETF), on Monday dropped to their lowest since November 9, 2018.

Among other metals, silver dipped 0.3% to $14.95 an ounce, having hit $14.81, its lowest since December 26, in the previous session. Spot platinum gained 0.2% to $887.67 an ounce while palladium rose 0.1% to $1,362.40.

Reuters