According to ANZ analysts, gold has regained its magic over the past 3 months, with its safe-haven standing coming back to the fore amid associate step-up within the US-China trade war.
Key Quotes
“The tension has brought with it expectations of rate of interest cuts by a large number of central banks. However, technically, gold is wanting overbought, and that we wouldn’t be stunned to check costs pull back within the short term.”
“The recent step-up in US-China trade tug-of-war considerably raised the stakes, with the market growing involved a few international recession. producing activity is already weak across numerous regions, and yield curves area unit inverting. Against such a scenery, the central banks’ policies ought to stay accommodative. The America central bank appearance committed to act befittingly to shield the America economy against any trade-related delay.”
“Investor demand continues to grow powerfully. ETF gold holdings rose to 2426t, with year-to-date inflows of 216t. Speculative long positions have conjointly magnified by 447t to 1096t.”
“Gold has become a crowded trade, raising the likelihood of a short correction. On a weekly basis, it's crossed the overbought line of seventy on the Relative Strength Index (RSI).”
“Net long positions are at their highest since Sep 2016. However, history shows this hasn't been a hindrance to higher costs over the medium term. we tend to believe the basics ought to still be adjunct enough to limit the losses in any technical-based sell-off. Ultimately we tend to expect gold to trade higher over next 12-month.”
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