Gold expected to bounce
Posted on Dec 02, 2019 at 12:00 am
November wasn’t a great month for the yellow metal as prices were down almost 4%. This was the biggest drop seen since November 2016. This decline was seen following positive news about a deal between Beijing and Washington which further weakened demand for the safe-haven metal.Hopes for an interim U.S.-China trade deal buoyed demand for riskier assets.There was not much clarity as to where will these trade talks lead to, hence the volatility was reflected in the trading prices.
Dampening gold prices pushed the dollar prices high as both are inversely proportional.U.S. President Donald Trump on Wednesday signed into law congressional legislation backing protesters in Hong Kong, prompting Beijing to warn of “firm counter measures”.
The Hong Kong protest went uglier as the reports suggest, thus souring the mood and thereof on their indices. Friday being half session, the US and data flow once again big here are few warnings from economists when they say that Hong Kong is the biggest political risk for financial markets. Today there is rupee traction on weaker side.
Gold, considered a safe store of value during economic or political uncertainties, has gained more than 13% this year, mainly due to the tariff dispute.
But this week gold once failed to make headway through USD $1,460 - $1,465 on Wednesday, sold lower on trade headlines and strong U.S. data. It was generally one-way traffic throughout the session, as the yellow metal skewed offered in Asia, before accelerating declines in Europe/U.S. hours.
If the yellow metal crosses the $1500 an ounce mark then there is further potential for a price rise. But if it breaks below $1445 then a significant correction is expected which will result in further losses for gold prices.
A break above $1,500/oz would suggest the potential for additional upside in prices. In contrast, a break below $1,445/oz would point to a more significant correction underway, and we would expect further losses for gold prices.
Gold seems to be under pressure though it may hit lower side target near 37500 and should give little bounce towards $1470 in the international markets where traders can sell for moderate gains.