Gold Breaks Above 1,290 Amid Safe Haven Appetite; Watch NFP

Gold is trading higher amid risk aversion environment. However, the move is contained as commodities are not strong enough.
Mauricio Carrillo
Gold bars and US dollar banknotes

Gold is trading higher on Friday as investors are looking for safer assets where to put their money. Silver is up too, but the movement is small, while copper is down.

Worries about the global economic situation following the ECB dovish stance and ugly data in China has sparked concerns.

Hey Draghi, maybe it was too much!

On Thursday, the ECB released its monthly monetary policy decision with a new LTRO and unchanged interest rates.

The Market was waiting for a slightly dovish position from the ECB, but the central bank went beyond.

It is not only a conservative position but a full dovish stance that said no rate hikes in 2019 and significant concerns about the European economy.

Investors reacted by selling the euro.

It could be the reaction expected by the European Central Bank, a falling Euro. However, it also spread into concerns about the whole global economy.

Then, China economic data came well below expectations on Friday and worries about the global economic situation dominated markets.

Dollar-denominated exports in China collapsed 20.7% between January and February, well below the 4.8% decline expected by market.

Imports declined 5.2% in the second month of the year, below the 1.4% drop expected by market.

As Analysts at Lloyds Bank said, “risk sentiment subdued ahead of US payrolls.”

Equities and other risky assets have moved lower on the last day of the week, “driven by an increase in concern over the outlook for the global economy.”

It’s all about risk aversion today, and gold is taking profit of that. Experts are now in a wait-and-see mode just ahead of the employment report in the United States.

Gold breaks above range, but it remains below 1,300

XAUUSD Gold daily chart March 8, 2019

Gold is trading positive on Friday as investors are reluctant to take risks and they are betting on safe havens like the yellow metal.

After three days of consolidation between 1,280 and 1,290, the unit jumped to break and to trade as high as 1,296. Its highs level since Monday, March 4.

XAU/USD is currently trading at 1,293, 0.60% positive on the day. The equation is simple, as risk aversion is on the table, dollar softens and gold cashes out.

As FX Empire analyst James Hyerczyk highlights, “a weaker US Dollar also tends to make dollar-denominated gold more attractive to foreign traders. A risk-off scenario also tends to drive up gold’s appeal as a safe-haven asset.”

Would the gold rally last? Well, all eyes are now on the United States employment report, and its famous confirm payrolls number. It will define the fate of the dollar, and then for Gold.

Silver is up, but not really

XAGUSD Silver Daily chart March 8, 2019

Silver is trading positive on Friday as investors are taking profit of risk aversion environment and the asset is mimicking gold’s performance.

However, the XAG/USD is still capped but the 200-day moving average around 15.15 as it has been doing in the whole week.

Now, the XAG/USD is trading 0.55% positive on the day at 15.10. However, the pair doesn’t seem strong enough to extend gains.

Again, its fate is determined by the nonfarm payrolls data.

Copper down after two technical breaks

Copper is decoupled of other commodities as it is falling strong on Friday following two significant technical breaks.

XCU/USD is currently trading at 2.8692, 1.20% negative on the day after it broke below the 2.8860 support and it fell under the 20-day moving average at 2.8760.

The pair fell to 2.8645, its lowest level since February 20.

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