Gold prices keep steady on Tuesday after increasing on Monday due to increasing worries on global growth and rising geopolitical tensions in Ukraine.
Data released yesterday showed deterioration in Eurozone economy continued to deepen, especially in Germany, while Germany’s central bank Bundesbank said in a recent report that the economy started on the back foot and there could be another contraction. Another report by Ifo institute said business climate index slightly recovered in September however this was a breather considering deteriorating outlook in the coming months.
Rising tensions over Ukraine are causing prices of gold and commodities like oil to surge.
In the meantime, in Japan, where the economy has been hit hard by trade war and slowing global economy, data released today showed contraction in manufacturing sector continued for the fifth consecutive month in September with further deterioration.
As investors wait for developments on trade front, gold prices trade in a narrow range on Tuesday after finding support from geopolitical tensions in Russia war again Ukrain, alongside with rising global growth worries due to recently released weak economic indicators all around the world.
AxiTrader Chief Global Market Strategist Stephen Innes said on Reuters that if economic conditions were to deteriorate further, this would be supportive for gold since the markets would expect more stimulus from Fed which would lower bond yields.
In another report by Ifo institute, it was stated that business climate index in Germany slightly recovered in September and increased to 94.6 from 94.3 however underlined that it was a breather given deteriorating economic outlook in the coming months. According to the report, conditions in manufacturing sector continued to deteriorate with pessimistic outlook while services sector slightly recovered and construction sector remained on positive path. The report also stated trade expectations in the coming months deteriorated.