XAUUSD, Daily
Gold is an attractive investment during periods of political and economic uncertainty. Half of the world’s gold consumption is in the form of jewelry, 40% investment, and 10% in industry. The biggest gold producers are China, Australia, the United States, South Africa, Russia, Peru and Indonesia. The biggest consumers of gold jewelry are India, China, the United States, Turkey, Saudi Arabia, Russia and the UAE.
Total Q1 demand grew slightly to 1,083.8t, up +1% y/y. The coronavirus outbreak, which hit the world during the first quarter, was the biggest factor affecting demand for gold. When the scale of the pandemic and potential economic impact began to emerge, investors sought safe-haven assets. Gold-backed ETFs attracted huge inflows (+298t), which pushed global ownership of these products to a new record high of 3,185t. Total investment in bars and coins fell to 241.6 tons (-6% y/y) due to a 19% drop in demand for gold bars (to 150.4 tons) beating a sharp surge in demand for gold coins, up 36% to 76.9 tons, due to safe-haven buying by Western retail investors. Source : GOLDHUB
Central banks continue to collect gold, although it is estimated that net purchases will slow sharply. Amid increasing volatility and uncertainty, global gold reserves grew by 145t in Q1. But Russia announced it would stop its long-term purchasing program from April, signaling a sharp slowdown in global net purchases. Total Q1 supply fell 4% as lockdowns hit mining production and gold recycling. Project productivity slowed and even stopped in an effort to stem the spread of the virus. Source: GOLDHUB
Spot Gold
Gold fell more than 2% to as low as $1,689 an ounce on Wednesday printing a 15-day low, as money flowed into risky investments in hopes of recovery from an economic slump driven by the coronavirus, as countries around the world continue to ease lockdown restrictions.
There isn’t much change in global investor sentiment today, as the stock market continues to rally on optimism about easing lockdowns. Much better than expected employment data from the US provides a bit of refreshment. The Australian Dollar weakened due to profit taking after a long rise. The Franc is the weakest while the Canadian Dollar is not much different ahead of the BoC interest rate decision. On the other hand, the New Zealand Dollar and the Euro are now stronger. The market could turn into mixed consolidation trading.
Technically, Gold is creeping back to 1700, which has proved little support this week. The break is likely to extend the corrective pattern from the peak of 1765.25 with another down leg, towards 1673.53 (FE 100).
That may be a sign of a rebound in the Dollar elsewhere. Overall gold is still in an upward bias. With a down experiment seen from the formation of a lower high.
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Ady Phangestu
Analyst – hfindonesia
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