The Gold steadies on a downward trend

Gold’s price steadied in the most recent daily sessions but maintained its downward trend formed since the past months. Even though the precious metal’s price is higher from where it started at the beginning of the month, some bearish tendencies have managed to cut back Gold’s advancement in December. Some of the most probable matters currently relating to Gold trading will be identified and briefly overviewed in this report. Our aim is to provide awareness and ideas to gold traders. Our technical analysis at the end will complement our fundamentals in order to provide a more complete analysis.

First of all, the USD of which Gold’s price is denominated into, continues to be on the back foot moving even lower in the current week. Despite the fact that Gold and the greenback tend to have a negative correlation, in the recent months both have lost significant ground moving downwards, for various and different reasons. The greenback’s movement is mostly dominated by the US fiscal stimulus packages aimed at speeding up economic recovery from losses suffered by the covid-19 outbreak. Even though, no stimulus package has been announced until this moment, the matter seems to be in the center of the markets focus. Media headlines regarding the negotiations seem to keep traders in a wait and see position and any announcements could increase volatility and force Gold’s price in a sudden movement.

Even though Gold’s price is significantly higher from where it started in January 2020, since the previous August and the months forward a strong selling appetite for the precious metal have brought it much lower.

Impressively however, at the moment Gold’s price is approximately $300 higher from where it started the current year, even as it has been in a selling momentum for the past 4 months. In our opinion Gold’s price continues to be driven by news regarding the vaccine distribution and usage in various countries. As more people are vaccinated around the world we could say that economic activity could continue to be on the rise, as they will feel much more confident to leave their house. However, due to the fact that covid-19 cases are still on the rise globally forcing governments to impose new lockdown measures, the situation remains very fragile. In the short term, traders might be finding reasons to add long Gold positions as was the case for Tuesday’s European morning.

On a separate note, more economic outlooks from many countries around the world will be coming up in the following days with a number of central banks having interest rate decisions with conferences or reports.

Countries like the US, the UK, Japan, Norway and Switzerland will be providing information on their economic performance from their central banks perspective. In our view, the most important for Gold traders is the US Federal Reserve interest rate decision and its accompanying press conference. In many cases in the past, the Fed’s events have produced significant market moving effects for Gold’s price thus caution is advised for traders with open positions on Gold or traders willing to trade the event. Please note this is the final FOMC meeting of the year and comments on how business activity, employment levels, inflation or investment appetite could be of particular interest to traders. The event comes up on the 16th of December, in the American session.

技术分析

XAU/USD daily chart

Gold has been trading between our (R1) 1870 resistance level and our (S1) 1820 support level since the 2nd of December. Both the pre mentioned levels have been tested in more than two daily sessions in the timeframe we have noted but have not been breached, which is evidence the levels are currently in the market’s focus. To the upside, the levels we have noted above the (R1) 1820 which is the highest price reached so far in December, are the (R2) 1910 barrier and the (R3) 1955 line. To the downside, below the (S1) 1820 support level we have noted the (S2) 1775 last seen on the 1st of December and even lower the (S3) 1740 as our lowest point for this report. The RSI indicator below our chart has formed a slight upward slope implying some bullish momentum is in place currently. Overall, Gold’s trend according to our daily chart could be downwards.