Daily Brief, Dec 25: Happy Christmas – Quick Update on Gold
Arslan Butt • 2 min read
Good Morning, traders.
Team FX Leaders wishes you a Merry Christmas and a Happy New Year! May this bring a lot of happiness and success to all of us. Fellas, the market is fully closed today, and it’s likely to exhibit slight fluctuations on December 26. Let’s have a quick update about gold’s fundamental and technical outlook.
GOLD prices closed at $1499.020 after placing a high of $1500.47 and a low of $1484.360. Overall the trend for gold prices remained bullish throughout the day.
Gold prices rose to $1500 level an ounce on Christmas eve as the demand of investors was driven higher by the remaining fears of recession and equity markets’ highs. Gold rose above $1500 at the highest level since 5th November and was up on Tuesday by nearly 1.1%.
On the data front, at 19:59 GMT, the Richmond Manufacturing Index from the Federal Reserve Bank of Richmond came in less than expected and weighed on the US dollar. The actual figure of the Manufacturing Index for the month of December was in negative -5 against the forecast of 1.
The drop in manufacturing activity published by the Federal Reserve Bank of Richmond weighed on the US dollar and, in reverse, gold prices moved upward.
This year stocks on Wall Street have had one of their strongest and most prolonged bullish trends on the back of pending US & China trade deal. Another factor including in the rise of the equity market was the growth in US jobs and strong macroeconomic data.
Gold markets are moving sideways with the equity market over worries that the stock market could turn lower at the start of next year after a mostly bullish 2019. Investors are preparing for the 2020 trade in the view that it is a good time to purchase yellow metal to hedge their bets after the drop in equity prices.
On trade deal front, US President Donald Trump said on Tuesday that Chinese President Xi Jinping and he have agreed to have a ceremony to sign the first phase of the trade deal.
The two nations revealed the details of a phase-one deal this month, which included the cancellation of planned tariffs on Chinese products by the US in return for a large number of American farm purchases by Chinese companies. This has been a central issue for more than a year-long dispute between both countries.
However, the phase-one deal is the start of settling things out between the US & China, which will be followed by at least two more stages.
Gold prices have risen by more than 16% on the back of 17 month-long trade war between the two largest economies of the world. However, some analysts believe that the upside of the market is not infinite and that in the first quarter of next year, a correction could happen to make gold an excellent candidate to hedge in.
Daily Technical Levels
Pivot Point: 1486.67
On Tuesday, the precious metal continued to trade bullish as expected, and it placed a high of around 1499.020 after crossing over the 1,480 resistance level. On Thursday, gold may continue trading higher until 1.504 and 1,510 as the recent daily close is very bullish. Bearish trend can be seen below 1,511 in the coming days. Good luck!