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Gold prices soared with Gold Spot (XAU) extended gains from the level of $1313.44 (Day close on 22nd March 2019) to the present level of $1317. The gold prices surged post-emergence of possible recession indicator in the global economy. The U.S-10-year bond yield slipped to the level of 2.418% (Dayâs low on 22nd March) from the level of 2.770% (dayâs high on 3rd March). The drastic fall in bond yields ignited fear among market participants over the building recession in the global economy.
Apart from the drastic increase in bond prices and fall in bond yield to maturity across various time to maturities, the slowdown in the U.S. economy supported the gold prices. The U.S. manufacturing sector marked a slowdown, and the U.S. monthly flash Manufacturing PMI declined to 52.5 for February as compared to the market expectation of 53.5 and previous monthâs 53.0.
The fall in manufacturing activities marked by the decline in Flash Manufacturing PMI supported the gold prices; however, the fall in the PMI index was above the mean value of 50 which in turn raised apprehension among the market participants and kept a lid on the gains and prevented any sharp upside in gold prices.
Another factor which supported the gold prices was the delay in Brexit, which raised concerns over the no-deal Brexit from Eurozone. The pessimism among the investors over global economic growth, coupled with fear of no-deal Brexit exerted the pressure on stock prices, and stock prices tanked across various global stock exchanges. The decline in return from other financial assets such as stocks and bonds appreciated the prices of yellow-metal as it moves inversely to the return on other financial assets.
How did gold miners on ASX react to the rising gold prices?
The gold miners on Australian Stock Exchange welcomed the rise in gold prices and share prices of various gold miners extended gains after breaching the short term trendlines previously.
The share prices of Newcrest Mining Limited (ASX:NCM) rose and traded in positive territory for most of the dayâs session before finally settling at A$ 26.200 (as on 25th March), up by 3.19% as compared to its previous close. The prices extended the gains to mark a level of A$26.330 (Dayâs high) and breached the previous week high of A$25.660.
Share prices of Evolution Mining Limited (ASX:EVN) followed the same trajectory and marked the level of A$3.750 (Dayâs High) before finally settling at A$3.74, up by 2.47% as compared to its previous close.
Other gold miners such as Regis Resources (ASX:RRL) and St Barbara (ASX:SBM) followed the same footprints and ended the dayâs session in green, up by 1.54% and 0.91% respectively as compared to their previous close.
On the data front, the market participants are eyeing on the U.S. CB consumer confidence data to gauge the economic condition of the U.S. economy and decide the direction of gold prices, the data which is due on 26th March 2019 is a leading indicator to reckon the trust of the population in the domestic economy. Apart from the data, the bullion investors are keeping an eye on development in on-going trade talks between the two major economies to resolve the long-standing bilateral disagreement.
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