Gold rises as technical momentum builds despite stronger dollar

Bengaluru — Gold rose on Wednesday, rebounding from a key support level with technical momentum proving more influential than a stronger dollar and rallying stock markets.

Spot gold was up 0.2% at $1,226.54 an ounce at 10.34am GMT. US gold futures were down 0.1% at $1,229.80 an ounce.

“Gold is moving technically and is giving a very good signal after it rebounded from $1,220 levels,” ActivTrades chief analyst Carlo Alberto De Casa said. “We are now approaching another key resistance area around $1,230 and a break above $1,230 to $1,235 will confirm an appropriate inversion for gold and it would no longer be a rebound.”

Prices have eroded both the 55-day moving average about $1,200, and a six-month downwards trend, and closed above the August 28 high of about $1,214, Commerzbank analysts wrote in a note.

Gold, sometimes seen as a harbour during political and economic uncertainty, is still some 10% down from peaks hit in April as investors opted for the dollar while the US-China trade war unfolds against a backdrop of higher US interest rates.

The dollar firmed and global stocks gained as a rally on Wall Street boosted risk appetite.

Investors have now turned their attention to the release of minutes from the US Federal Reserve’s September policy meeting at 6pm GMT, for fresh clues on the pace of monetary tightening. The Fed raised interest rates last month for the third time this year and said it planned four more increases by the end of 2019 and another in 2020.

Markets also kept a close eye on a summit in Brussels, where British Prime Minister Theresa May will address EU leaders, for the future of Brexit.

Analysts said the recent gains in gold could also be attributed to investors unwinding short positions after speculators had piled up record bets on prices falling further. Prices hit their highest in two and a half months, at $1,233.26, on Monday as a rout in global stock markets forced investors to seek safety in the metal.

“The shorts seem uneasy with gold re-appearing as a safe-haven asset,” ING analyst Warren Patterson said. “Moving forward, with growing concerns about the global economy on the back of trade tensions, there is potential for a bit of an upside in gold markets.”

In other metals, silver was up 0.2% to $14.67 an ounce; platinum rose 0.4% to $840.60; and palladium was up 0.1% at $1,079.90. 

Reuters