Mubasher: Gold prices recovered on Friday as the US dollar retreated slightly, while jitters about a steep global economic slowdown after the European Central Bank (ECB) downgraded its growth forecast were heightened by soft Chinese figures, supporting demand for the safe-haven metal.
By 8:51 am GMT, US gold futures went up 0.65% to $1,294.50 per ounce, while spot gold rose 0.68% to $1,294.29 per ounce.
“There are still concerns about the China economy especially when the global demand is weakening and we don’t see a silver lining of immediate recovery in the Eurozone as well,” Singapore-based CMC Markets analyst Margaret Yang was quoted by Thomson Reuters.
The US dollar’s retreat and weaker stock markets have boosted gold prices, Yang said, predicting that slowing growth and intensified political anxieties should keep the yellow metal in a bullish territory.
At 8:54 am GMT, the US dollar index fell 0.22% to 97.4540, after hitting a three-month high in the prior session as the ECB delayed an interest rate hike until 2020. Asian equities also eased as an unexpected weak export data from China aggravated worries about global growth.
However, “ECB’s decision echoed US dollar strength, and we saw risk aversion,” Reuters quoted DailyFX senior currency strategist Ilya Spivak who think that the precious metal would not remain supported on the long term.
“We have seen a substantial decline in prices since mid-February and the reason for that is the dollar,” Spivak said, adding that safe-haven demand for the greenback would co-occur with the risk-off appetite.
Market participants are now awaiting the US non-farm payroll data due later in the day, which would give insight into the strength of the country’s economy. This could signal the future approach of Federal Reserve’s monetary policy.
Investors are also focused on trade negotiations between the US and China.
Gold could decline to $1,250 per ounce in the event of a strong non-farm payroll figures and more positive developments in the talks between Washington and Beijing, OCBC Bank said.
