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The Gold trimmed its biggest one-day advance in more than a year a day before, as the US Dollar rebounded, while ongoing decline in oil prices continued to hurt gold as an inflation hedge. Weaker oil prices may result in slower growth of consumer prices and, consequently, hamper gold, which is usually considered as a hedge against inflation. Meanwhile, a weaker US currency normally boosts dollar-denominated gold as it makes yellow metal cheaper for holders of other currencies.
Among news, which added to the Gold's increase in price on Monday, the US manufacturing sector growth slowed in November to its lowest rate since January, while indicators of new orders and output also declined to their lowest levels since the beginning of the year. Markit said its final US Manufacturing PMI gauge fell to 54.8 from October's final reading of 55.9. The new orders sub-index declined to 55.0 from 57.1 in October. Output, meanwhile, was unchanged from the flash reading, dropping to 55.6 from October's final reading of 57.8.
Bank of Canada's rate decision, US employment data to weigh on Gold price
Wednesday will deliver a major portion of fundamental data, which is going to have an indirect impact on the price of Gold. In the Unites States, the non-farm employment change is set to continue showing very strong numbers, while growth in productivity is projected to exceed 2% on the quarterly basis in Q3. Moreover, the Bank of Canada will make a decision on the overnight interest rate in the country; however, it is assumed to stay unchanged at 1%.{ATTACHMENT}
XAU/USD to decrease trading range by the end of 2014
The long-term outlook for the XAU/USD cross remains bearish, taking into account the recent US dollar's bullish tendency across the market. The Gold entered a descending triangle pattern against the Buck, meaning that trading range o the pair will decrease soon. From above the long-term downtrend line is located around $1,220, while a support in face of 2014 low is placed at $1,131. By the end of the year we would suggest the Gold to hover around $1,150 per ounce, while in January it is likely to depreciate slightly to trade at 2014 low.Daily chart
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Concerning the latest developments of Gold's price, the bullion for immediate delivery climbed 3.8% to hit the daily maximum at $1,221 per ounce on Monday. It seems that daily pivot points were too weak for the metal to stop it from rising. It was able to breach the long-term downtrend, but closed below it at $1,211 at the end of the trading day. We expect the Gold to consolidate on Tuesday and decline to the daily S1 at $1,162 in course of the day.
Hourly chart
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