· Gold rose above $1,500 an ounce on Tuesday as lingering fears of recession and equity market highs drove investor demand.
· Spot gold was up nearly 1% in thin trade at $1,499.48 per ounce by 01:40 p.m. ET (1840 GMT), its highest since Nov. 5, while U.S. gold futures settled up 1.1% at $1,504.80.
· "We are still not seeing good (U.S.) numbers come out of the business investment side. We are wholly dependent on consumer spending. But when consumer spending starts to flag a bit, then the economy could really start to slow down more noticeably," Edward Meir, analyst at ED&F Man Capital Markets, said.
· New orders for key U.S.-made capital goods barely rose in November and shipments fell, data on Monday showed, suggesting business investment will probably remain a drag on economic growth in the fourth quarter.
· Data from the United States is keenly watched for cues on the central bank's future monetary trajectory. Gold is sensitive to rising interest rates, which lift its opportunity cost.
Meanwhile, optimism on U.S.-China trade talks has lifted equities to record levels. World stocks remained on track for their best year in a decade, while Wall Street dipped from near-record levels.
· "The stock market is getting very overbought. If you have a correction in stocks, gold could benefit," Meir added.
· U.S. President Donald Trump said on Tuesday he and Chinese President Xi Jinping will have a ceremony to sign the first phase of a trade deal agreed this month.
· The 17-month long dispute has driven a 16% rise in gold prices, with putting it on track for its best year since 2010.
· Bulls remained the winners of the week as they added gains to the price in a low volume/volatility environment. Technicals continue to support the bulls while fundamentals stay mixed, but they need to defend the support for further gains.
Possible trades are on both sides but mainly on upside, gold can be bought above $1480 for the targets of $1495 and $1510 with a stop loss placed below $1468. Longer term target $1527.
Dips towards support (and breakout region) can be used to create longs for the above mentioned targets.
· The IMF and other forecasters expect 2020 to be better than in 2019. Markets are also expecting growth to rebound in 2020.
Not to forget, hard Brexit is still on the table and could rock the equity markets, sending gold higher. All in all, the odds appear stacked in favor of gold bulls. Dips, if any, due to trade optimism will likely be short-lived.
· The precious metals sector is likely to outperform other commodities for the second year in a row in 2020, according to the Australia and New Zealand Banking Group (ANZ), which is projecting for gold to rise above $1,600 next year.
ANZ sees gold rising steadily throughout next year and peaking at $1,620 in December.
“Our gold model points to USD1,600/oz in 2020. Our model – based on real interest rates, USD and inflation expectations – shows gold’s value at USD1,470/oz. With a slightly weaker USD and only a tepid increase in bond yields, it forecasts gold will hit USD1,600/oz in 2020,” the strategists wrote.
Global themes of de-dollarization and geopolitical uncertainty are a few of the main drivers that will keep gold prices supported, ANZ’s outlook stated.
The U.S. presidential election will be one of the risks to keep a close eye on as it directly impacts the financial markets. “With several possible outcomes, we see room for market volatility. This should set the stage for safe-haven assets to perform through 2020,” the strategists explained.
· Elsewhere, palladium rose 0.5% to $1,884.16 an ounce. Platinum inched 0.4% higher to $940.08, while silver rose nearly 2% to $17.76 an ounce, setting it for a fifth straight session of gains.
Reference: Reuters, Kitco, Trading View
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