Gold stays calm near $1,500, adds more than $80 this week
- Risk-off flows ramp up the demand for the precious metal this week.
- Broad USD weakness supports the XAU/USD pair's rally.
- US-China trade conflict, concerns over currency war lift gold.
After starting the week at $1,412, the troy ounce of the precious metal rose to its highest level since April 2013 at $1,510 before spending the last trading day of the week in a consolidation phase. As of writing, the XAU/USD pair was virtually flat on the day at $1,500.
Gold puts a smile on investors' face
Surprise rate cuts by the Reserve Bank of India and the Reserve Bank of New Zealand concerns over the potential impact of a prolonged US-China trade war on the global economy and fears of an all-out currency war forced investors to seek refuge throughout the week.
Major global equity indexes suffered heavy losses, strong demand for Treasury bonds weighed on the yields, and the precious metal capitalized on the risk-off atmosphere as a traditional safe-haven. Commenting on the market conditions, “We believe gold remains relevant given the elevated economic and geopolitical risks. Investors will continue to shift their strategic portfolio positions in favour of gold,” said ANZ analysts.
“Safe-haven flows continued to build in gold, with ETF holdings rising to six-years high of 2393t. Further, central banks bought 374.1t of gold, as emerging markets tried to diversify their reserves.”
On top of the rising demand for gold, the broad USD weakness this week supported the pair's rally. With US President Trump aggressively calling upon the Fed to cut rates and the US 10-year Treasury bond yield slumping to its lowest level since October 2016, the US Dollar Index is looking to post a weekly loss of around 0.6%.
Technical levels to watch for