The price of gold stalled its positive momentum, which was triggered by dovish FOMC meeting minutes. Thus the precious metal once again failed to conquer the key threshold of 1,300 USD amid a modest USD rebound. During the trading yesterday, gold rose its value from 1,284.87 USD to 1,292.78 USD per ounce, but today stalled its uptrend to 1,295.99 USD.
Given the overnight bullish break-though to the short-term descending trend-line, coinciding with 100-hour SMA, any meaningful retracement might be seen as a buying opportunity. In further dovish sentiment, the minutes showed that some committee members felt the central bank can be more patient on tightening monetary policy in an environment of low inflation pressures.
However, the investors’ interest to gold remains weak, as traders move to assets where they can benefit more from the development of the US-China trade war. The analysts and markets are still assessing what had happened in Beijing during the 3-day talks. The uncertainty of the situation keeps the market volatile and trading volumes lower.
The largest gold-based stock index, the SPDR Gold Trust, has its highest gold reserves since August 2018, according to the fund’s data.
The demand for ETFs is one of the main drivers of the accelerated increase in gold price over the last month, continuing to grow. The holdings in global gold-backed ETFs and similar products increased by 69 metric tons to 2,440 tons in 2018, bringing in about 3.4 billion USD in net inflows, which seriously supports the price of the precious metal.
Gold price technical analysis
Gold prices rose within the bounds of their near-term range, but topping cues implied in a bearish Dark Cloud Cover candlestick pattern are yet to be negated.
If gold price fells below 1,285.88-1,283.90 USD, then the next support will be the zone 1,276.01-1,275.03 USD. In a breakthrough, the downward trend will continue to 1,272.07-1,270.09 USD.
On the flip side, if gold price overcomes the resistance range of 1,297.71-1,299.69 USD, it will target testing the zone 1,302.65-1,303.63 USD. Upon success, the upward trend will continue to 1,311.52-1,313.50.
Short term momentum is flat but prices are overbought. The fast stochastic is printing a reading of 82, above the overbought trigger level of 80. The index has a flat trajectory after recent generating a cross over sell signal. The MACD histogram is printing in the black with a negative trajectory and poised to cross below the zero-index level which reflects accelerating negative momentum which points to lower prices for the yellow metal.
However, based on the uncertainty of the US-China talks, disappointing data on Chinese inflation and coming Brexit, possible the price of gold will break the level of 1,300 USD by mid-January, even with an expected increase above 1,350 USD.
Silver price technical analysis
Gold is not the only precious metal seeing a strong start in 2019. Optimism in silver is building as prices hold near their highest levels in almost six months.
During trading yesterday, silver rose its value from 15.62 USD to 15.72 USD per ounce. This morning it traded at 15.73 USD.
If today the silver price overcomes the resistance zone of 15.79-15.82 USD, it will head testing the zone 15.86-15.87 USD. Upon success, the upward movement will continue to 15.98-16.00 USD.
On the flip side, if the silver fells below the support area of 15.63-15.61 USD, the next support will be the 15.50-15.49 USD area. In the case of breakthrough, the downward trend will continue at 15.45-15.42 USD.
Critical level investors should keep an eye is 16.35 USD per ounce, which represents a long-term resistance level. Silver is poised in 2019 to move above a resistance level that has held the market in check for three years.