Gold edges higher as US data fans slowdown fears
Gold prices edged up on Wednesday, after rising as much as 1 percent in the previous session, as disappointing US manufacturing data fanned fears of a sharp global economic slowdown and stoked bets of further interest rate cuts.
Spot gold was up 0.2 percent to $1,481.76 per ounce at 0736 GMT. Prices hit a near two-month low of $1,458.50 on Tuesday, before climbing as much as 1 percent during the session.
US gold futures GCv1 were little changed at $1,488.20 per ounce.
“Considering the risks to the global economy, gold is still a strong safe-haven asset,” said Phillip Futures analyst Benjamin Lu.
US manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, fanning fears of an economic slowdown and raising expectations that the US Federal Reserve could further ease monetary policy.
But Lu added: “Until and unless Fed gives really strong dovish signals, we will see gold trading around $1,500.”
Lower interest rates reduce the opportunity cost of holding non-yielding gold. The data also prompted President Donald Trump to lash out at the Fed, saying the central bank has kept interest rates “too high”, with a strong dollar hurting US factories.
Markets now await US non-farm payrolls data due on Friday to gauge the state of the world’s largest economy amid its bitter trade war with China. “I think the market does not want to rush ahead of the non-farm payroll data in case there is a surprise hit,” said AxiTrader market strategist Stephen Innes.
“Investors are bit scared. This emotion will probably inhibit people from jumping back into the (gold) bandwagon over the near term. They are going to need some convincing.”
On the technical front, spot gold may consolidate in a narrow range of $1,462-$1,488 per ounce, or bounce towards $1,514, as its short downtrend from the Sept. 4 high of $1,557 could have temporarily ended, according to Reuters analyst Wang Tao.
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