Gold prices edged higher on Tuesday as investors weighed uncertainty over potential US-Iran talks and awaited key US labour market data, while RHB Investment Bank Bhd (RHB Research) maintained a bearish technical outlook on the precious metal.
Spot gold rose 0.2% to US$4,061.96 an ounce by 0650 GMT, while US gold futures gained 0.7% to US$4,118.30.
Markets are awaiting a series of US employment indicators this week, including job openings data, the ADP employment report on Wednesday and non-farm payrolls figures on Friday. The data could influence expectations for the Federal Reserve’s interest rate path.
Ajay Kedia, director at Mumbai-based Kedia Commodities, said gold was currently in a consolidation phase and that signs of weakness in the US labour market could pressure the US dollar and support gold prices.
Investors are also monitoring developments in the Middle East after US President Donald Trump said talks with Iran were under way, while Tehran denied that negotiations were taking place or planned.
The conflict has pushed up energy costs and fuelled inflation concerns, potentially keeping pressure on central banks to maintain or raise interest rates. Higher rates tend to weigh on gold as the non-yielding asset becomes less attractive relative to interest-bearing investments.
Traders are currently pricing in a 65% probability of a US rate hike in September. Federal Reserve Bank of New York President John Williams said he remained optimistic that inflation pressures would ease gradually. Still, it warned the central bank would respond with rate hikes if inflation failed to slow.
Against this backdrop, RHB Research said COMEX gold had pulled back below its 20-day simple moving average (SMA) and closed at US$4,060.30 after trading between US$4,113.90 and US$4,044.10.
The research house said the latest bearish candlestick reaffirmed US$4,200 as the immediate resistance level, while gold remaining below its 50-day SMA indicated that the medium-term trend remained bearish.
“Premised on the bearish technical setup, the yellow metal may retreat towards USD4,000 again,” RHB Research said.
A bearish breakout below US$4,000 could extend the correction towards the next support at US$3,850, it added.
RHB Research maintained a negative trading bias as long as gold remains below US$4,200 and advised traders to retain a short position initiated at US$4,605.70, based on the March 19 close. It placed a stop-loss at US$4,200.
The research house identified US$4,000 and US$3,850 as the first and lower support levels respectively, while resistance levels stand at US$4,200 and US$4,400.
Meanwhile, Citi expects gold prices to stagnate or potentially decline over the next month before rallying to US$4,500 in the fourth quarter and US$5,000 in the first half of next year.
Elsewhere, spot silver gained 1.2% to US$58.88 an ounce, platinum rose 1.3% to US$1,648.97 and palladium climbed 1.1% to US$1,278.38.
