Gold edged up to trade near $1 280 an ounce on Tuesday as global growth concerns boosted demand for the metal, but investors remained cautious as they assessed the possibility of a US rate hike.
Comex gold for delivery in April climbed 0.56% to $1 284.1 per troy ounce by 08:02 GMT, shifting in a daily range of $1 286.5-$1 272.0. The precious metal fell 0.18% to $1 276.9 on Monday.
Projections of slowing global growth have prompted the European Central Bank to introduce a stimulus program in order to fight deflation in the region and jump-start economic development. However, the move caused volatility in European markets, additionally boosted by the recent Greece elections, pushing investors to seek the safety of the metal.
Despite rising worries about a sooner US interest rate increase by the Federal Reserve, the precious metal has jumped 8% so far this year, after it scored its biggest monthly increase in thee years.
At their last meeting, Fed officials boosted their outlook for the US economys growth to “solid”, but a report released yesterday showed that US manufacturing increased in January at its slowest rate in around a year. Consumer spending also marked its biggest fall in more than four years.
The news, which came on top of a 0.4% lower-than-expected gross domestic product in the last quarter of 2014, further boosted speculations that the Fed will take its time in raising borrowing costs, which has been close to zero since 2008.
On Friday, another piece of key data is due to be released. According to analysts polled by Reuters the Labor Departments jobs report will show that US employers added 230 000 new jobs in January, which is below the figure from December but still overall strong.
The US dollar index for settlement in March was up 0.14% at 94.865 at 07:58 GMT, holding in a daily range of 94.880-94.695. The US currency gauge fell 0.28% on Monday to 94.734. A stronger greenback makes dollar-denominated commodities more expensive for holders of foreign currencies and curbs their appeal as an alternative investment, and vice versa.
“I think the sentiment on gold has changed from a very bearish tone last year which was due to expectations of higher U.S. interest rates,” said Yuichi Ikemizu, branch manager at Standard Bank in Tokyo, cited by CNBC. “We have seen some good demand from Asia around $1,250 and the market is quite long at the moment.”
Mr. Ikemizu also suggested that most traders remain divided and recommended caution after the US release of employment data as he expects sharp liquidation of long positions if the report shows strong figures.
Assets in the SPDR Gold Trust, the biggest bullion-backed ETF, edged up 8.36 tons on Monday to 766.73 tons, their highest since October. Changes in holdings typically move gold prices in the same direction.
Pivot Points
According to Binary Tribune’s daily analysis, April gold’s central pivot point on the Comex stands at $1 275.8. If the contract breaks its first resistance level at $1 285.0, next barrier will be at $1 293.2. In case the second key resistance is broken, the precious metal may attempt to advance to $1 302.4.
If the contract manages to breach the S1 level at $1 267.6, it will next see support at $1 258.4. With this second key support broken, movement to the downside may extend to $1 250.2.
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