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Last Updated : Jun 06, 2019 10:12 AM IST | Source: Reuters

Gold steadies after falling from 15 week peak; rate cut hopes support

Meanwhile on the trade front, Mexican and US officials are set to resume talks in Washington on June 6 aimed at averting an imposition of tariffs on Mexican goods.

Gold prices were stable on June 6, hovering below the 15-week high hit in the previous session, supported by trade worries and a possible US rate cut, even as some investors locked in profits in bullion after a recent rally.

Spot gold was up 0.1% to $1,330.69 per ounce as of 0349 GMT, after hitting its highest level since Feb. 20 at $1,343.86 on June 5.

US gold futures rose 0.1% to $1,335.10 an ounce.

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"For the last two days we are seeing that riskier assets are starting to recover from signals from the Fed's sightly more accommodative stance," said Benjamin Lu, an analyst with Singapore-based Phillip Futures.

Investors booked some profits after gold prices surged around $70 in the past five sessions, Lu said.

"In the longer run, gold is going to sustain this bull run. We are looking at the shift in the Fed policy. The Fed's dovish signal will obviously boost gold prices and weaken the dollar."

Recent weak economic reports out of the United states further bolstered bets for an interest rate cut by the US Federal Reserve.

Data on payrolls showed US private employers hired at the slowest pace in more than nine years in May, weakness that analysts blamed on heightening global trade tensions.

Meanwhile on the trade front, Mexican and US officials are set to resume talks in Washington on June 6 aimed at averting an imposition of tariffs on Mexican goods.

However, President Donald Trump said "not enough" progress was made on ways to curb migration when the two sides met on June 5.

On the technical side, Spot gold may go back into a range of $1,315-$1,321 per ounce, according to Reuters technical analyst Wang Tao.

The fall from the June 5 high of $1,343.86 could be deep enough to signal a reversal of the uptrend from the May 30 low of $1,274.44, Tao said.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.3% to 757.59 tonnes on June 5 from June 4.

In other precious metals, silver gained 0.3% to $14.82 per ounce after touching a more than one-month high of $15.04 in the previous session.

"Greater financial market volatility or increase in trade or geopolitical risks may stoke safe haven demand, especially if gold is also rallying," HSBC analyst James Steel said in a note.

"We still look for silver to gain and forecast an average price of $15.27 for 2019 with a range of $13.90-$16.45, suggesting the market is bottoming."

Palladium rose 0.6% to $1,336.25 an ounce, while platinum climbed 1% to $807.14, having hit a near three-week high at $832.63 on June 5.
First Published on Jun 6, 2019 10:02 am
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