Gold fell for the second consecutive day on Wednesday, hitting as low as $1,278.12 late in the session on large selling bids, though tensions over North Korea and upcoming French and UK elections underpinned demand in the safe-haven asset. Spot gold was last trading at $1,282.14. Nervousness heading into the French election should theoretically provide some support to gold, but at some point, we think the markets will start to discount a poor showing for Le Pen and perhaps siphon off some of the risk premium already baked into prices. Federal Reserve Vice Chairman Stanley Fischer painted a picture of a brightening global economy that can better manage the spillover of gradual monetary tightening in the U.S. The dollar index held above 99.5 as the overseas market responded well to the two interest rates hikes by the Federal Reserve in four months, weighing on gold. With heavy resistance at $1,300, gold is expected to pull back after France’s presidential election. We maintain our view that investors shall restrain from chasing highs ahead of the election.
Spot silver continued to slip at $18.2225 an ounce. On technical front, the metal has a dim outlook as the daily MACD suggests a rising likelihood of pullback. Investors are recommended to turn to profit-taking from net long positions.

 
Dealing Room, ICBC Beijing Branch
Qin Gang

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