Gold edged higher in early trading Tuesday, with spot gold up 0.2% at $4,337.22 an ounce, as analysts pointed to easing energy prices and a more favorable macroeconomic backdrop for the precious metal. In a separate quote, spot gold was 0.1% higher at $4,334.83 per ounce.
Analysts at Maybank said in a research report that the balance of risks for gold now tilts upward. “At this point, with Brent crude down more than 30% from its [April] 30 high, and Fed’s hawkish repricing having pressured bullion to a fair extent, the balance of risks is skewed towards a more bullish case for gold,” the analysts said. They added that “a sustained move lower in oil prices could bring relief to U.S. [Treasurys] as well as EM currencies and that could in turn bring about a more sustained move higher in gold.”
Maybank identified chart-based resistance at $4,900 per ounce and then at $5,020 per ounce.
Zaheer Anwari, CEO of The Revacy Fund, said improved market confidence — driven by easing concerns over energy supply disruptions, higher inflation, and interest rates — is creating a better environment for gold. Anwari said he sees stable support around $4,000 an ounce and expects continued buying from central banks to provide strong structural support.
Traders are focused on several central bank decisions this week. While the Bank of Japan’s rate hike has supported Japanese bond yields and could limit gold’s gains, investors expect the Fed to hold rates. If the Fed’s updated economic and inflation outlook appears positive, it could further boost gold’s rally, according to Anwari.