· Gold prices rose slightly to their highest in nearly two months on Friday, heading for their best week in more than four months, as the dollar eased and investors hedged against risks ahead of the year-end.
Spot gold hit its highest since Nov. 4 at $1,513.88 per ounce and was up 0.1% at $1,512.81 per ounce by 0458 GMT. For the week, it has gained over 2% so far, its best since early August.
U.S. gold futures were up 0.2% at $1,517.60 per ounce.
· “There’s risk hedging in the market ahead of the year-end. We broke $1,485, which likely triggered stop-loss buying and pushed gold up to $1,500 in a pretty liquid time of the year when volumes are lower than normal,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA.
Apart from news that Russia could consider investing part of its National Wealth Fund in gold, a slightly weaker dollar against a basket of currencies supported bullion, by making the metal cheaper for holders of other currencies.
· Russian Finance Minister Anton Siluanov said on Tuesday he saw investment in the metal as more sustainable in the long-term than in financial assets.
· “If Russia starts holding gold, being one of the biggest supplier to the market, that would significantly dampen supplies. This is a significant macro driver,” said Stephen Innes, a market strategist at AxiTrader.
· Limiting gold’s advance, Asian shares jumped to an 18-month high on optimism over the signing of a U.S.-China trade deal, after China’s Commerce Ministry said on Thursday Beijing and Washington were in close communication.
Gold is on track to register its best year since 2010, gaining nearly 18% so far this year, owing to a 17-month-long tariff war between the world’s top two economies.
· Investors also took stock of data from China that showed profits at industrial firms grew at the fastest pace in eight months in November, but broad weakness in domestic demand remains a risk for company earnings next year.
· Holdings in the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.4% to 892.37 tonnes, its highest since Nov. 29.
· Gold Technical Analysis
Gold is currently trading at $1,512 per Oz, representing a 2.22% rise on Monday's opening price and is on track to post the biggest weekly gain since August.
The metal had rallied by 3.93 percent in the seven days to Aug. 11.
Breakout
The weekly chart is now reporting a bull flag breakout – a continuation pattern which indicates the pullback from September highs above $1,555 has ended and the rally from lows near $1,270 registered in April-May has resumed.
The flag breakout has opened the doors for a re-test of $1,557 (September high).
Supporting the bullish case is the weekly relative strength index, which has violated the falling trendline.
With prices trading well above the flag resistance of $1,483, a breakout will likely be confirmed on a weekly closing basis.
· The price of gold is already showing promise of its resurgence after topping its downward-sloping resistance trendline connecting the September 04, November 01 and December 12 intraday highs. Recent strength exhibited by XAU/USD is illustrated by its RSI climbing back above 50 and there seems to be potential for the precious metal to march higher before running into a reading above 70 – deemed “overbought territory.”
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A possible obstacle for gold prices could be the zone of confluent resistance around the $1,500-1,515 level, which is underpinned by the mid-point and 61.8% Fibonacci retracement of the commodity’s trading range since printing its 2019 high around the $1,555 mark.
· Gold price per ounce rose above $1,500 on Thursday, breaching a key psychological level for the precious metal, as investors weigh if the Federal Reserve will continue its pause in interest rate cuts in 2020.
The gains in gold, long considered a safe-haven asset, came even as both stocks and bonds are set to end the year at a tandem high.
This year, gold has risen more than 17% including Thursday's surge and is on track for its best yearly performance since 2010 on US-China trade war uncertainty and a slew of rate cuts from central banks around the world. Investors bought into the precious metal as a way to hedge their investments against a potential downturn as recession fears mounted throughout the year.
But now, the Fed is unlikely to continue to lower rates after three rate cuts in 2019. And on Tuesday, President Trump said that the phase-one trade deal in the works with China is done and will be signed soon.
That could mean that further gains from gold are muted, as one economist argued in September that more rate cuts from the Fed could send the commodity over $1,600. Another said that if recession risks were to continue, the precious metal could surge over $2,000 and hit an all-time high.
Even though recession risks have quieted for now, investors are still buying into gold to position for 2020. Goldman Sachs and UBS both forecast that gold will continue to gain in the next year and could climb to $1,600 per ounce.
But the view isn't unanimous. JPMorgan has a bearish bet on gold in 2020 and thinks it could fall as riskier assets such as stocks take off.
· Gold rose for a fourth straight session, topping $1,500 an ounce and on course for its best annual gain since 2010.
The metal touched a seven-week high as investors positioned for 2020, with post-Christmas gains coming even as global equities inched higher and U.S.-China trade concerns eased.
The break through $1,500 in the face of new highs in U.S. stocks, a rebound in U.S. Treasury yields and a strong dollar “leads to an assumption that bulls will buy in the New Year, so the market is trying to position ahead of time,” said Tai Wong, the head of metals derivatives trading at BMO Capital Markets. “It has momentum that is a little mysterious and no one wants to stand in the way.”
The climb comes amid a focus on whether the Federal Reserve’s rate-cutting pause will hold next year following three reductions in 2019.
“Caution needs to be exercised as the bullion markets could be extremely volatile, given the market’s low liquidity profile, especially to the downside as trade news remains positive and equity markets still scaling new heights,” Innes said.
Heading into the new year, there are mixed views on gold’s prospects. Earlier this month, JPMorgan Chase & Co. advised betting on the commodity to slide as the global economy gathers momentum. Among the bulls, Goldman Sachs Group Inc. and UBS Group AG see prices climbing to $1,600.
· Elsewhere, silver fell 0.2% to $17.85 per ounce, while platinum rose 0.4% to $950.50. Both the metals were poised to register their best week since late August.
Palladium advanced 0.4% to $1,908.58 per ounce.
Reference: Reuters, Bloomberg, FXStreet, DailyFX, Business Insider
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