Gold prices rose on Tuesday due to a widespread risk aversion amid the lingering concerns over global growth. The incoming economic data continue to signal that the global GDP is losing steam, which fuels demand for the precious metal since December. The decline in 10-year US Treasury yield was the largest since early January played into the bullion’s hands as well.
The additional fears came from the reports that Washington rejected the offer to hold a meeting with the Chinese officials ahead of next week’s crucial trade talks. The move sparked doubts among investors that the two countries will be able to strike a deal finally. As a reminder, Trump threatened to increase tariffs to 25% from the current levels of 10% without a trade agreement. Meanwhile, Russia and Saudi Arabia Energy Ministers canceled their planned meeting where they were supposed to discuss the recent OPEC+ agreement, which doesn’t add optimism as well.
Looking ahead, the World Economic Forum in Davos will set the direction for gold in the days to come. Considering further bearish signals from the economy around the globe, the remaining trade issues, Brexit-related uncertainty, unstable oil market and a number of political risks, the forum attendees may express concerns and even raise alarm bells, which could fuel demand for safe havens. This scenario will benefit the yellow metal that could regain the $1,290 resistance and re-target the key $1,300 barrier.