Concern about growth buoys gold
The metal is benefiting from the pressure the dollar is under due to government shutdown in the US and the worry that it will limit growth
Bengaluru — Gold prices rose on Thursday as the dollar declined due to concern the prolonged US government shutdown will limit economic growth at the same time that global growth is slowing as well.
Spot gold was up 0.15 at $1,283.31/oz, as of 3.26am GMT, while US gold futures were down 0.1% at $1,282.60/oz.
“We are seeing a weaker US dollar for the moment, which is in general supportive for gold,” Michael McCarthy, chief market strategist at CMC Markets said.
However, McCarthy cautioned that bullion price gains are limited by slowing investor buying as indicated by price charts used by technical traders.
“The issue for gold is there is a very heavy resistance seen around $1,290 and $1,310. A further weakening of the US dollar could be supportive. But, we need something to really push gold through the resistance level,” he said.
The US dollar index, which measures the greenback against a basket of six major currencies, fell for third day, dropping 0.3% during that period. However, Asian shares rose on Thursday after Wall Street managed to end higher.
On Wednesday, US President Donald Trump said that the US was doing well in trade talks with China, saying at a White House event that China “very much wants to make a deal”.
However, a prolonged US government shutdown reminded investors of risks to growth to the economy.
White House economic adviser Kevin Hassett said in a CNN interview the US economy could see zero growth in the first three months if the partial government shutdown lasts for the whole quarter.
Meanwhile, investor focus turned to the European Central Bank (ECB), which is widely expected to keep its monetary policy unchanged at its first policy meeting of 2019 that ends later on Thursday.
Market watchers also expect ECB to acknowledge growing threats to the eurozone economy.
“The ongoing trade war, Brexit and slow global growth narrative are supportive for gold at present levels, as is Chinese seasonal demand,” MKS PAMP Group said in a research note.
“That being said, Comex non-commercial and exchange-traded fund (ETF) holdings remain extended, so we expect a bit of tug of war in the short-term between $1,270-$1,300.”
Holdings of SPDR Gold, the largest gold-based ETF, was at its highest since June 2018.
Among other metals, palladium, which hit a record high of $1,434.50/oz last week on low inventories and rising demand, rose 0.1% to $1,348.50/oz.
Platinum was steady at $795.
Silver, meanwhile, was down 0.1% $15.35/oz.