GOLD (XAU/USD) PRICE FORECAST:
Gold prices found its legs in the US session rising back above resistance at the $2040/oz level. A slightly stronger US Dollar kept Gold bulls at bay in the European session, but ongoing comments from Fed policymakers around rate cuts continue to weigh on the Greenback.
Supercharge your trading prowess with tips and tricks to trading Gold!
Recommended by Zain Vawda
How to Trade Gold
SAFE HAVEN APPEAL AND US DOLLAR WEAKNESS
Geopolitical tensions have become a key driver this week following developments in the Middle East. The Red Sea has become breeding ground of uncertainty, and this seems as if it is only going to intensify. This leaves Gold in the driver’s seat with more gains in store if no solution is found to the ongoing strife and tension in the Middle East.
The renewed US Dollar weakness has also assisted Gold hold the high ground and continue its advance. Federal Reserve policymakers have this week struck a dovish tone with most speaking about the amount of rate cuts needed in 2024 with very little push back besides the odd comment about monitoring data moving forward. The only push back in terms of comments came from Policymaker Barkin saying that he thinks inflation is more stubborn than the average Fed official.
US Treasury Yields also continued their struggles today with both the 2Y and 10Y yield which is also benefitting Gold.
US2Y and 10Y Daily Chart
Source: TradingView, Chart Prepared by Zain Vawda
US DATA AHEAD
US data lies ahead with a key print being the US PCE data which is due on Friday. This may have a significant impact on US rate expectations before the year is out while we also have the final Q3 GDP number.
There is other “high impact” US Data due with CB consumer confidence and the final Michigan Consumer Sentiment number which should not have a material impact but rather short-term moves that could be erased toward the end of the trading session.
Trade Smarter – Sign up for the DailyFX Newsletter
Receive timely and compelling market commentary from the DailyFX team
Subscribe to Newsletter
Form a technical perspective, Gold is interesting following the recent selloff which stopped last week as Gold printed an indecisive candle close. This should have given us a sign that we may get further upside this week which has come to fruition but further upside in my opinion appears limited.
As things stand a daily candle close above the $2040 mark this could facilitate a run toward resistance at the $2050 mark and beyond with the fundamental picture supporting this narrative. However, I have a feeling that a retracement may come into play soon with a host of resistance area between the $2050 and $2078 handles which may prove to be a hurdle to far.
Key Levels to Keep an Eye On:
Gold (XAU/USD) Daily Chart – December 19, 2023
Source: TradingView, Chart Prepared by Zain Vawda
IG CLIENT SENTIMENT
Taking a quick look at the IG Client Sentiment, Retail Traders are Overwhelmingly Long on GOLD with 60% of retail traders holding Long positions. Given the Contrarian View to Crowd Sentiment Adopted Here at DailyFX, is this a sign that Gold may struggle to put in more gains going forward.
For a more in-depth look at Gold client sentiment and tips and tricks to use it, download the free guide below.
of clients are net long.
of clients are net short.
Written by: Zain Vawda, Markets Writer for DailyFX.com
Contact and follow Zain on Twitter: @zvawda
element inside theelement. This is probably not what you meant to do!
It has been an eventful year for the stock market, with unexpected twists and turns brought on by the COVID-19 pandemic. After experiencing a sharp downturn in March, the stock market has been on a continuous rebound, reaching new all-time highs in recent days. Despite the ongoing uncertainty and economic turbulence, one thing has remained constant – the unstoppable rise of the bulls.
Investors are witnessing an extraordinary bull run as the benchmark indexes continue to surge, with the S&P 500 reaching a record-breaking 3,500 in the last week. However, it’s not just the stocks that are seeing an uptick, but also the precious metals market – particularly gold, which is currently on the brink of hitting the $2,050 mark.
The safe-haven demand for precious metals has been on the rise as investors seek to protect their portfolios amidst the ongoing economic turmoil. This demand, combined with the bullish run in the stock market, has propelled gold prices to a record high of $2,070 per ounce in August. With the unprecedented infusion of monetary stimulus by central banks worldwide, investors are turning to safe-haven assets like gold to hedge against inflation and currency devaluation.
Gold is often seen as a safe haven in times of economic crisis, and the current climate is no exception. Its inherent value and limited supply make it a desirable asset to invest in, especially when faced with market volatility and uncertainty. In addition, gold has a low correlation with other assets, making it an excellent diversification tool for investors looking to mitigate risk in their portfolios.
The recent surge in gold prices has also been fueled by the weakening U.S. dollar. The currency’s decline, combined with the uncertainty surrounding the upcoming U.S. elections and the ongoing trade war between the U.S. and China, has only increased the demand for gold. With China and Russia both actively adding to their gold reserves, it’s safe to say that gold continues to be a highly prized asset in the eyes of global investors.
In addition to gold, other precious metals like silver and platinum have also seen a significant increase in demand. Silver has seen a steady rise, with prices up by 96% since the March lows, while platinum prices have jumped by 31% in the same period. These trends show that investors are not just buying gold for its safe-haven status, but they are also diversifying their portfolios by investing in other precious metals.
For those who are hesitant to directly invest in precious metals, there are other options to gain exposure to this asset class. Many gold mining companies have seen their stocks soar as gold prices continue to rise, making them potentially lucrative investment opportunities. Additionally, exchange-traded funds (ETFs) offer a less risky alternative for investors looking to add gold to their portfolios without the hassle of physical ownership.
However, with the continuous rise in gold prices, many investors are left wondering whether it’s too late to jump on the bandwagon. The answer to that is, it’s never too late to invest in precious metals. Experts believe that gold still has room to grow, and some predict that it could reach $3,000 per ounce in the not-so-distant future. With the current market conditions and global uncertainty, gold is a solid investment option that could potentially bring in significant returns in the long run.
In conclusion, the unstoppable rise of the bulls in both the stock and precious metals market is a testament to the resiliency of the market amidst unprecedented times. The safe-haven demand for gold, along with other factors such as the weakening U.S. dollar, has propelled the precious metal to record-breaking highs. Whether you are a seasoned investor or a beginner, it’s worth considering adding gold to your portfolio to hedge against potential market volatility and diversify your investments. With $2050 on the horizon, now is an opportune time to jump on the gold bandwagon and ride the unstoppable bull charge.