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James Hyerczyk
Gold Bars and Dollar

Gold prices are rebounding after yesterday’s sharp decline, helped by a weaker U.S. Dollar and growing concerns about a global economic slowdown. Both events are boosting dollar-denominated gold’s appeal as a safe-haven asset. Furthermore, some investors feel that the slowdown in Europe and Asia may move into the United States. This could force the Fed to continue to delay future rate cuts. Gold tends to rally when rates are kept low.

At 10:10 GMT, April Comex gold is trading $1302.10, up $7.00 or +0.54%.

Other factors increasing demand for gold are worries over Brexit, renewed concerns over U.S.-China trade negotiations, and a dovish Bank of Japan. Bullish gold traders are also drawing support from lower Treasury yields and reports that North Korea may suspend nuclear talks with the United States.

Optimism over a possible delay in Britain’s exit from the European Union is helping to generate some demand for risk. Additionally, investors seem to have shifted their tone to more positive in regards to the timing of a U.S.-China trade deal.

According to a report by Xinhua news agency, Chinese Vice Premier Liu He spoke via telephone with U.S. Trade Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer. Earlier in the session, traders were growing a little concerned about the lack of progress towards a trade deal. Traders took this position after President Trump said on Thursday that the U.S. would probably know in the next three or four weeks about a possible trade deal with China.

In Japan, the Bank of Japan (BOJ) kept monetary policy unchanged as expected. According to the BOJ, short-term interest rates will remain at minus 0.1 percent. Furthermore, it said the central bank will purchase government bonds so that the 10-year JGB yields will remain at around zero percent.

In its policy statement, the BOJ offered a relatively weak assessment of the Japanese economy and predicted it will “continue its moderate expansion, despite being affected by the slowdown in overseas economies for the time being.”

Traders are also saying safe-haven buying in gold is being fueled by a report that North Korea is considering suspending nuclear talks with the United States. Russia’s TASS news agency reported North Korea’s vice foreign minister said the country is considering suspending nuclear talks with the United States.

Daily Forecast

Gold is currently trading inside yesterday’s range which suggests investor indecision and impending volatility. Look for the upside bias to continue with a breakout over $1311.50 possible if investors continue to look at gold as a safe-haven asset.

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