Global recessionary fears boost safe-haven appeal
The US 2-year to 10-year yield spread has inverted for the first time since 2007. A US yield curve inversion has preceded economic recessions historically whilst signalling a higher risk-environment in the immediate term.
A delay in US tariffs on Chinese consumer electronic goods though granting slight reprieve to risk assets has failed to restore investor confidence as market risks stay elevated.
Subdued global economic momentum and a prolonged Sino-US trade dispute continued to blunt risk appetites whilst creating supportive conditions for safe haven assets.
What should investors look out for in the longer term?
An inverted US yield curve is a traditional bellwether for an economic recession. It reflects worrisome signals on global economic outlook as investors demand a higher payoff in lieu of a higher perceived risk environment.
Persistent weakness in global economic indicators has dampened risk appetites whilst increasing safe haven flows substantially. Depressed risk sentiments along with simmering geopolitical tensions will keep investors vested within safe haven assets for the current term.
Technical Analysis for Spot Gold (XAUUSD)
Strong support at key technical level of US$1,480.00 (50.0 per cent Fibonacci Retracement Level) has kept the bullish trend scenario valid.
Gold bulls must break above US$1,535.00 (Weekly Highs) for an extension of the bullish wave in the current term.
Should gold prices break above the key resistance level (US$1,535.00), we expect a bullish continuation towards the next main station of US$1,560.00.
On the flip side, failure to hold above US$1,500.00 (Key Psychological Level) could trigger a bearish retracement towards the key trend line support of US$1,480.00.
Weekly Market Assessment: Mildly Bullish Key Resistance Level (1): US$1,535.00 Key Resistance Level (2): US$1,560.00 Key Support Level (1): US$1,500.00 Key Support Level (2): US$1,480.00
