Gold shines bright as geopolitical risks threaten global growth
A weekly market summary for gold, June 10-14
HEIGHTENED geopolitical tensions have elevated safe haven appeal as risk sentiments stay measured over growing downside risks. US President Donald Trump has threatened to enact additional levies on Chinese imports should President Xi baulk when it comes to a meeting at the G-20 summit. A deepening rift between the world's two largest economies over political and trade issues have kept markets on the edge as investors deliberate weaker business confidence and subdued global growth prospects. A sudden escalation in Middle Eastern tensions (oil tanker attacks) further boosted bullion demand as geopolitical uncertainties intensified for the current term.
What should investors look out for in the longer term?
Gold prices notched a 14-month high over global growth concerns and heightened geopolitical tensions. Risk-off appetites along with US rate cut expectations have kept investors vested within safe haven assets amid turbulent market conditions. Lacklustre conditions in risk assets from an 11-month-long Sino-US trade conflict have negated market confidence substantially as investors contemplate subdued economic momentum in 2H 2019.
Though we remain optimistic on gold prices amid looming market uncertainties, cooler geopolitical overtones and dovish US monetary policy will cap bullish gains for the longer term.
Technical Analysis for Spot Gold (XAUUSD)
The precious metal reversed early losses after strong support was spotted at US$1,319.00. Gold bulls have sought to extend the bullish wave with repeated attempts on previous highs of US$1,348.00. A successful breach at key resistance level (US$1,348.00) will trigger strong upward momentum towards the next main station of US$1,365.00. We continue to caution against exceedingly bullish calls as stochastic readings hint on overbought pricing levels. A bearish correction will see a mean reversion in gold prices towards key support level of US$1,325.00 in the near term.
Weekly Market Assessment: Range-Bound Key Resistance Level (1): 1,365.00 Key Resistance Level (2): 1,375.00 Key Support Level (1): 1,336.00 Key Support Level (2): 1,325.00
