By Vivian Teo
The spot gold price fell during Asian trading hours on Tuesday as it stayed capped by resistance.
Spot gold was last at $1,343.44-1,343.85 per ounce, down $5.80 from Monday’s close. Trading ranged at $1,338.30-1,352.40 so far.
Gold had surged as high as $1,357.50 on Monday – just slightly below the 27-month high of $1,359 reach on June 24 during Brexit vote counting.
“Gold tried to break through the Brexit high but heavy offers have so far kept the metal below this important technical level of $1357/58,” said MKS Group on Tuesday morning.
Gold had ratcheted higher after the Brexit vote and the strong gains have prompted some profit-taking, said William Adams, head of research at FastMarkets.
“With prices running up to challenge the highs and failing to push higher, more profit-taking may follow now,” he said.
But further gains seem likely in the longer term, he added.
“We said two weeks ago that a ‘leave’ vote would open up a new chapter for Europe; this is now set to unfold in the weeks and months ahead. In the short term, there could be profit-taking – the UK and Europe may have entered the calm before the storm of Brexit negotiations and contagion,” Adams noted.
In data, China’s Caixin June services purchasing managers’ index (PMI) released on Tuesday came in at 52.7, higher than forecast of 52.3 and May’s reading of 51.2.
“Service sector growth is now supporting the overall economy, and the expansion for services is coming at a time when the manufacturing index is contracting, suggesting the nation’s economic structure is becoming more balanced,” Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, said.
The stronger services PMI contrasted with the Caixin June Chinese manufacturing PMI which came in at 48.6 last Friday. It was the index’s third monthly decline in a row and marked the steepest deterioration in manufacturing conditions since February.
Other data due later on Tuesday includes a string of final services PMI from the EU and Eurozone countries, along with factory orders and IBD/TIPP economic optimism from the US.