Gold set for third weekly gain amid growth fears
Bengaluru — Gold prices edged lower on Friday but were headed for a third consecutive weekly gain, as the fear over a global economic slowdown and a lack of clarity on the US-China trade war boosted the metal’s safe-haven appeal.
Spot gold was down 0.1% at $1,521/oz as of 4am GMT, but is up nearly 1.6% so far this week after rising in the previous two weeks.
US gold futures were steady at $1,5231/oz. “Gold is consolidating here. The important consideration is that none of the headwinds have gone away; the tariffs got delayed a bit, but the underlying trade war remains and lower yields are supportive for gold,” said Ilya Spivak, senior currency strategist with DailyFx.
“Markets are looking ahead for the Jackson Hole symposium. In context of recent gains that might give us some corrective pullbacks, as people reduce exposure before event risk.”
US President Donald Trump said on Thursday he believed China wanted to make a trade deal and that the dispute would be fairly short.
This comes after Beijing vowed to counter the latest tariffs on $300bn of Chinese goods but called on the US to meet it halfway on a potential trade deal.
With the trade saga going nowhere, investors have hedged against a global slowdown by buying safe-haven assets like gold, Japanese yen and US treasuries.
Earlier this week, 10-year treasury yields dropped below the two-year yield for the first time in 12 years. Curve inversion is widely considered a warning that the economy is headed for recession.
Bullion has risen nearly 8%, or more than $100, because the beginning of the month amid the heightened trade tensions and a slew of disappointing economic data globally.
“The gold continues to benefit from safe-haven inflows, which should ensure that any pullbacks are limited ahead of the weekend,” Oanda analyst Jeffrey Halley said in a note.
Investors will shift their focus to the Federal Reserve’s annual symposium next week. Traders see about a one-in-three chance of a 50 basis-point rate cut by the Fed this September.
Meanwhile, the dollar index edged higher on Friday and was on course for a weekly gain.
On the technical side, spot gold may fall into a range of $1,483-$1,503/oz, as suggested by its wave pattern and a retracement analysis, said Reuters technical analyst Wang Tao.
Elsewhere, silver was down 0.2% at $17.22/oz but was on track for a second consecutive weekly gain.
Platinum fell 0.3% to $836.10/oz, while palladium rose 0.3% to $1,448.57/oz.