October 12, 2018
PRECIOUS-Gold slips, but hovers near 10-week high amid market turmoil
(Reuters) - Gold prices edged lower on Friday, but held near a more than 10-week high hit in the previous session when the metal breached a key resistance level, stoking optimism about an uptick in prices.
Spot gold was down 0.3 percent at $1,219.67 an ounce, as of 0428 GMT, after the bullion jumped about 2.5 percent on Thursday, its sharpest gain since June 2016, as a rout in equities sent investors rushing to safe havens.
U.S. gold futures were down 0.4 percent at $1,223.20 an ounce.
"The sinking of global markets has led people to seek gold as a safe haven. However, in Asian hours today we have seen some profit-taking," said Peter Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.
"With prices breaking the resistant $1,200 level and also crossing $1,225, it could be a signal that gold market is on the upside. Especially, given that during November and December we also see increased physical buying."
Asian shares appeared tentative on Friday, holding steady after a nine-session losing streak, but sentiment was frail after Wall Street shares crumbled and expectations of market volatility shot up to an eight-month high.
"Further declines in stocks will put pressure on gold speculators to square up initially, and since gold speculative (managed money) shorts outweigh longs, that implies short-covering," said Nicholas Frappell, global general manager, ABC Bullion, Australia.
"Whether gold is really the beneficiary of a flight to safety is harder to say than it looks, because it is more likely that large shorts are de-risking their positions and substantial exposure to a price rally, which is not the same as fresh funds flowing in."
Gold has fallen more than 10 percent from a peak in April, with investors increasingly switching to the safety of the greenback as the U.S.-China trade war unfolds against a backdrop of rising U.S. interest rates.
But prices have recovered from a 1-1/2-year low of $1,059.96 hit in mid-August, propped up by limited safe-haven buying at lower levels linked to concerns over economic growth and inflationary pressure from soaring oil prices.
Spot gold may extend its gains to $1,237 per ounce, as suggested by a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.
Spot gold has gained about 1.5 percent this week, heading for its best weekly performance in seven.
Meanwhile, palladium was up 0.3 percent at $1,080.25, after hitting its highest since Jan. 26 at $1,096.80 in the previous session.
Silver was little changed at $14.56, while platinum was hovering near a more than two-month high of $843.90 marked in the previous session.