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Gold's gains capped by rebound in stocks, but technicals bullish

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Reuters SINGAPORE
Last Updated : Feb 26 2016 | 6:48 AM IST

SINGAPORE (Reuters) - Gold was little changed above $1,230 an ounce on Friday as safe-haven gains were capped by an overnight rebound in global equities and oil prices, although technical signals for prices were bullish.

FUNDAMENTALS

* Spot gold was steady at $1,235.38 an ounce by 0043 GMT, after posting a small 0.4 percent gain in the previous session.

* Global equity markets got a boost from an upturn in crude oil on Thursday as the market focused on an upcoming meeting of major oil producers that investors hope could stabilize volatile petroleum markets.

* Asian shares rose on Friday following a firmer finish on Wall Street and as investors awaited a meeting of Group of 20 finance leaders that will likely offer words of reassurance, even if little in the way of actual policy stimulus.

* Gold prices are closely tracking moves in the equity markets. Its 16.5-percent rally this year has been fuelled by safe-haven bids as equities tumbled on lower oil prices and fears of an economic slowdown. The metal hit a one-year top of $1,260.60 two weeks ago.

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* Bullion is also supported by bullish technical signals.

* Gold has seen a bullish technical formation called the 'golden cross,' where the 50-day moving average goes above the 200-day moving average.

* The shorter term price average is now about $3 above the longer-term average.

* This is the first such occurrence in nearly two years and would be a bullish buy signal for technical traders and momentum-driven investors.

* An increase in the holdings of bullion-backed exchange-traded funds has also supported the rally, with assets of SPDR Gold Trust rising to the highest since March 2015 on Wednesday.

MARKET NEWS

* The yen was broadly softer early on Friday as demand for the safe-haven currency waned after a rebound in oil prices helped spur a rally on Wall Street.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin)

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First Published: Feb 26 2016 | 6:35 AM IST

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