Gold steadies below $1,300 level as global stocks retreat
Middle East tensions are supportive for bullion as global trade tensions reduce risk appetite; platinum is down 0.5%
Bengaluru — Gold steadied on Wednesday, holding just below the key $1,300 level, as global stocks retreated, pointing to reduced appetite for riskier assets as investors awaited clarity on the US-China trade front.
Spot gold was up 0.1% at $1,298.26 an ounce as of 11.18am GMT, having hit its highest level since April 11 at $1,303.26 on Tuesday. US gold futures edged 0.2% higher to $1,299.00 an ounce.
“There have been flows out of equities into safe havens,” said Quantitative Commodity Research analyst Peter Fertig, adding that stocks turned back into the red, despite strong economic data from Germany.
The eurozone’s biggest economy, Germany rebounded in the first quarter, growing 0.4% after zero growth in the previous three months.
A global equity bounce stemming from softer rhetoric by US President Donald Trump on the trade dispute with China waned on Wednesday as grim Chinese data and fresh Italian debt woes cast a shadow over global markets.
The softer rhetoric from Washington and Beijing, has, in part, limited gold’s gains.
“As long as there is no decision made that there will be no further import duties on Chinese goods, you cannot say the worst is over,” Fertig said, adding that there is also concern in the wider financial markets that the trade spat could further weigh on the Chinese, and in turn, global economy.
Data from China showed weak retail sales and industrial output growth weighed on markets and added pressure on Beijing to roll out more stimulus.
Tensions in the Middle East have also been supportive for gold, said Afshin Nabavi, senior vice-president at MKS.
Saudi Arabia said armed drones struck two of its oil pumping stations on Tuesday, two days after the sabotage of oil tankers near the United Arab Emirates; the US military said it was braced for “possibly imminent threats to US forces in Iraq” from Iran-backed forces.
Gold is considered a safe store of value in times of political or economic uncertainties.
On the technical front, the $1,300 barrier will prove a crucial pivot for bullion, analysts said.
“Gold market looks to be range-bound around $1,292 on the downside and $1,300 on the upside. If we break above $1,300, we could see prices rally up to $1,310,” Nabavi said.
Among other precious metals, silver rose 0.2% to $14.82 an ounce, while platinum fell 0.5% to $851.60. Palladium fell 1.2% to $1,319.85 an ounce.