The gold price stabilized on Wednesday, and the previous day fell slightly from a one-month high. However, the current market demand for gold is still strong, and the gold open interest contract hit the biggest increase in the past three years.
According to market data, spot gold is currently stable at $1,297.45 per ounce. US gold futures also held steady at $1,298 per ounce.
The dollar rose in early trading on Wednesday, while the Australian dollar hit a four-month low. Traders focused on China and Europe to find clues as to whether the global economy has weathered the worst. The stock market in Europe and the United States rose on the previous trading day.
George Gero, managing director of RBC Wealth Management, said: "We have seen some adjustments in the market, as the US dollar index rebounded slightly and the stock market rebounded. The (gold) traders temporarily withdrew some funds."
“The dollar has risen again, which has pushed gold prices down, but I think this is only temporary, as investors are primarily concerned with trade issues,” said ThinkMarkets chief market analyst Naeem Aslam in an email. Any callback can be a buying opportunity.
Investors are also closely watching the escalating tensions between the United States and Iran. Earlier, Saudi Arabia said that the two tankers in the country were one of the tankers attacked in the waters off the coast of the UAE. Gero said news such as the escalation of tensions in Iran has limited gold selling.
Gold prices rose 1.1% on Monday, the largest single-day percentage increase since February 19. It is worth mentioning that, according to Bloomberg News, the gold open interest contract hit the biggest increase since mid-2016, reaching the highest level in more than seven weeks.
Peter Thomas, senior vice president of the Zaner Group, said the market's attitude towards gold has changed, and safe-haven buying for gold has emerged. After the recent price drop, we saw a lot of people buying gold again.
In addition, the world's largest gold exchange-traded fund SPDR Gold Trust's holdings increased by 0.44% on Monday, the biggest one-day gain in the past two months, which also shows that investors' interest in gold has risen significantly.
Looking ahead, at 20:30 Beijing time on Wednesday, the US will announce April retail sales, which is the most important economic data this week. Foreign media surveys show that the monthly retail sales growth rate in April may slow down to 0.2% after a 1.6% rebound in March. The survey also showed that the monthly core retail sales rate in the United States is expected to increase by 0.7% in April, up from 1.2% last month.
Previously, US retail sales in March hit the largest increase since September 2017, and sales of cars and gas stations increased significantly. Bloomberg economists wrote that retail sales may be flat in April after very strong growth was released in March. Car sales have fallen sharply, while sales in other sectors have only risen modestly.
Analysts pointed out that if the US retail sales data released tonight is strong, it is expected to boost the US dollar, and gold may be under pressure; on the other hand, if the data is not performing well, it is expected to continue to push the price of gold higher.
(Article source: Global Forex Network)