27 December, 2018
It has been an incredibly bullish trading week for Gold thus far with prices hitting a 6 month high thanks to Dollar weakness and heightened political uncertainty in the United States.
Market sentiment remains fragile amid geopolitical risk factors while depressed equity markets have punctured investor confidence. With risk aversion likely to intensify on political instability in Washington, Gold has the potential to conclude 2018 comfortably above $1272. The relatively light global economic calendar should result in Gold prices being influenced by sentiment and the Dollar’s value.
As we head into the new trading year, the sentiment pendulum for Gold is swinging in favour of the bulls due to various factors. With expectations over the Fed taking a break on rate hikes next year and concerns of economic growth in the States threatening the Dollar’s safe-haven status, Gold is seen appreciating further. A yearly close above $1272 should instil bulls with enough inspiration to attack $1288 and the psychological $1300 level.
The Dollar edged lower against a basket of major currencies today concerns heightened over a partial U.S government shutdown and friction between the Trump and the Federal Reserve.
Growing fears of a slowdown in the United States have sent U.S treasury yields lower with the Dollar Index trading around 96.70 as of writing. With growth fears threatening the Dollar’s safe-haven status, buying sentiment towards the Greenback is likely to take a hit. In regards to the technical picture, the Dollar Index is under some noticeable pressure on the daily charts with prices hovering around 96.70 as of writing. A breakdown below the 96.50 is seen opening a path towards 96.00.
The fact that the Pound has failed to secure a daily close above the 1.2700 resistance confirms how the currency remains gripped by Brexit related uncertainty and political risk at home.
Sterling is likely to remain depressed ahead of the Parliament vote on Brexit in the new year. Technical traders will continue to closely observe how prices behave the 1.2700 level. Sustained weakness below this region is seen encouraging a move back towards 1.2630 and 1.2480.
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