Gold prices rebounded more than 1% on Friday as a softer US dollar and lower oil prices supported bullion, although RHB Research maintained its short position on COMEX gold amid a bearish technical outlook.
Spot gold rose 1.4% to US$4,190.57 per ounce as at 6.30am GMT, or 2.30pm Malaysian time, after hitting a two-month low on Wednesday. US gold futures for December delivery also gained 1.4% to US$4,215.30.
The weaker dollar made gold, which is priced in the greenback, more affordable for holders of other currencies. Lower oil prices also offered support as concerns over Middle Eastern supply eased following US President Donald Trump’s remarks that Washington would not attack Iran before November’s midterm elections.
However, uncertainty over the Federal Reserve’s interest rate outlook continued to weigh on sentiment. St Louis Fed President Alberto Musalem said further rate hikes would be needed to bring inflation back to the central bank’s 2% target. Higher interest rates tend to reduce gold’s appeal as a non-yielding asset.
In its technical outlook, RHB Research said selling pressure on COMEX gold had eased during Thursday’s session, with the metal closing at US$4,157 after trading between US$4,128.10 and US$4,170.70.
Despite the rebound, the research house said the Relative Strength Index remained below the 50% mark, indicating that the overall technical setup was still bearish.
RHB Research expects gold to test resistance at US$4,300 if the recovery continues, but sees downside towards US$4,000 and potentially US$3,800 if selling pressure resumes.
It advised traders to retain the short position initiated at US$4,284.80, with a stop-loss at US$4,400. The research house will maintain its negative trading bias until gold crosses above US$4,400.
Among other precious metals, spot silver rose 1.5% to US$60.22 per ounce, platinum gained 2.7% to US$1,677.80 while palladium climbed 3.3% to US$1,159.70.
