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Gold appreciates as the US dollar weakens

Gold appreciates as the US dollar weakens after the cautious speech of the Fed Chairman Jerome Powell.


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Gold appreciates as the US dollar weakens after the cautious speech of the Fed Chairman Jerome Powell. The prices of the precious metal recovered from two-week lows, rising as much as 1% to 1,225.34 USD per ounce at 0700 GMT, moving in range of 1,224-1,227 USD. The US gold futures were up 0.1 percent at 1,225.10 USD per ounce.

The weaker greenback makes the dollar-denominated gold cheaper for other non-US buyers. However, gains in gold were being limited by increased interest in riskier assets.

The investors expect more clues on the Fed’s monetary tightening policy from the minutes of November 7-8 meeting. however, it is not sure if it is not obsolete, as the change in the speech of Jerome Powell signs for a different approach to interest rates. The Fed has raised rates three times this year. the markets expect another increase in interest rates in December and three more hikes next year.

Higher US interest rates tend to boost the dollar, and also increase the opportunity cost of holding gold, which does not pay interest.

Gold price performance

Gold prices lost against the US dollar this year as the investors preferred the safe-haven currency as the US-China trade war unfolded and US interest rates rose.

There is very good resistance for gold at 1,240-1,242 USD levels and strong support 1,200 USD per ounce.

Gold appears to have marked a failed run at the monthly-high (1,237 USD) as it snaps the range-bound price action from the previous week, and the precious metal may exhibit a more bearish behavior over the coming days as it initiates a series of lower lows.

The IG Client Sentiment Report shows 82.3% of traders are still net-long gold compared to 84.0% last week, with the ratio of traders long to short at 4.64 to 1. The number of traders net-long is 0.9% lower than yesterday and 4.1% lower from last week, while the number of traders net-short is 5.9% lower than yesterday and 0.9% higher from last week.

The ongoing tilt in retail position undermines the rebound from the 2018-low (1,160 USD) as it offers a contrarian view to crowd sentiment, and the failed attempt to test the monthly-high (1,237 USD) brings the downside targets back on the radar as the price for bullion carves a fresh series of lower highs & lows.

Gold price technical analysis

During the trading yesterday, gold rose from 1,214.90 USD to 1,220.61 USD per ounce.

In today’s trading, if the precious metal gold overcomes the resistance zone 1,227.71-1,228.32 USD, it will target to reach and test the zone 1,234.81-1,235.11 USD. Upon success, the upward trend will continue to 1,243.12-1,243.73 USD.

If falling below the support zone 1,212.91-1,212.32 USD, then the next support will be the zone 1,204.29-1,203.99 USD. In case of a breakthrough, the downward trend may continue to 1,197.51-1,196.89 USD.

gold futures

Gold price fortecasts

Investing in gold next year might be one of the best options out there, as the US economy and the US dollar could be looking at taking a step back, according to the analysis of Australia’s forex broker Pepperstone.

Meanwhile, Goldman Sachs said commodities could surge around 17% over the coming months, with a fast-approaching G-20 meeting cited as a potential launchpad for raw materials. A dramatic sell-off in commodities comes at a time when traders are closely monitoring a flurry of market drivers.

IHS Markit sees gold prices trading between 1,200 and 1,300 USD per ounce in 2019, with prices hitting the top of the range in the later part of the year.

Silver price technical analysis

Yesterday the silver rose its value from 14.12 USD to 14.30 USD per ounce. This morning it trades at 14.30.

In today’s trading, if silver overcomes the resistance zone 14.42-14.44 USD, it will head to the zone 14.53-14.54 USD. With success, the upward trend will continue at 14.69-14.72 USD.

In case of falling below the support zone 14.16-14.14 USD, the next support will be the area of 13.99-13.98 USD. If a breakthrough happens, the downward trend may continue to 13.89-13.86 USD.