Gold prices steady after slide below key $1,500 level
Gold was flat on Tuesday, after declining more than one percent in the previous session hit by an uptick in risk appetite, while investors awaited meetings by policy-makers later in the week for clues on possible interest rate cuts.
Spot gold was stable at $1,495.21 per ounce at 0438 GMT.
On Monday, gold skidded 1.2 percent below the key level of $1,500, marking its biggest daily decline since July 19.
U.S. gold futures fell 0.4 percent to $1,505.20 an ounce.
“There is not a lot of conviction in today’s trading session for gold… Investors have gained some more confidence about the growth outlook and that weighs on gold,” said Michael McCarthy, chief market strategist at CMC Markets.
Asian shares extended their gains on Tuesday as hopes for stimulus in major economies tempered anxiety about a global recession, boosting riskier assets and taking the sheen off safe-havens such as bonds and gold.
Hopes for additional stimulus are rising after reports that Germany is prepared to increase fiscal spending, and after the People’s Bank of China took steps to lower corporate borrowing costs.
Meanwhile, the U.S. dollar held near a three-week high as an improvement in appetite for riskier assets lifted yields on U.S. government bonds.
Investors are now focused on the U.S. Federal Reserve meeting’s minutes due on Wednesday. They will also watch the Fed’s Jackson Hole seminar and a Group of Seven summit this weekend for clues on monetary policies by central bankers.
Traders see about an 86 percent chance of a 25 basis-point interest rate cut by the Fed in September.
“The prospects for further central bank interest rate cuts have kept the sell-off (in gold) contained well above significant resistance at $1,480,” Stephen Innes, managing partner, VM Markets, said in a note.
However, Boston Federal Reserve Bank President Eric Rosengren on Monday signalled no willingness to support further interest rate cuts, saying that U.S. economic conditions are still good and that easing policy could encourage a worrying debt build-up.
Also, hinting at a possible interlude in trade tensions, the U.S. will extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies to supply existing customers.
Spot gold may test a support at $1,483 per ounce, a break below which could cause a fall to $1,467, according to Reuters technical analyst Wang Tao.
Elsewhere, silver rose 0.2 percent to $16.90 per ounce.
Platinum was flat at $850.10 an ounce, while palladium inched up 0.1 percent to $1,474.45.