Gold Up Over Sluggish Economic Outlook, Lingering Risk Appetite Caps Gains
By Administrator_India
Gold was up on Monday morning in Asia over signs of a slow economic recovery.
Gold futures inched up by 0.04% to $1,950.60.
U.S. retail sales data released last Friday recorded a lower-than-expected growth of 1.2% month-on-month, compared to the 1.9% expected in forecasts prepared by Investing.com. Japan’s GDP data released earlier in the day also showed a larger than expected contraction of 7.8% quarter-on-quarter between April and June, compared to the 7.6% forecasted, marking the biggest contraction on record. At an annualized rate, Japan’s economy contracted by 27.8%.
However, the U.S. dollar is stabilizing and started the week roughly where it left off last week. The dollar has been lifted by rising U.S. bond yields, helping it climb out of weeks of losses and making gold cheaper for holders of other currencies.
But a possible sign of easing tensions in the U.S.-China trade war may have also increased risk appetite and capped gains for gold. China was reported on Friday to be planning to increase purchases of U.S. oil. The report came out ahead of a trade deal review over the weekend, which was postponed.
However, some analysts remain skeptical, and predict that the pull back in gold back down under $2,000 after a record-setting bull run may not be over.
“Considering the uber-bullish sentiment in gold, along with bloated positioning and speculative activity, the pullback still has room to run,” analysts said.
