Gold stays stable above $1,220

Source: Dukascopy Bank SA
"Opened positions for Gold stay positive (59% bullish / 41% bearish). It is possible that Gold will continue growing in price, with the closest resistance for it located at 1,244 and is represented by the monthly R2. At the same time, the probability of a downside movement exists as well, while for that purpose the closest support is placed at 1,205 and is represented by the monthly R1, as well as 55 and 20-day SMAs." 

© Dukascopy Bank SA
The middle of the week was rather calm for the price of yellow metal, as the small correction of 0.39% took place on Wednesday, following a significant climb a day ago. All in all, only one commodity, natural gas, managed to gain value of 1.48% during the trading day. It seems that this commodity is the most volatile on the market, with many spikes and drops registered during last couple of days. Oil continued to plummet, as Brent and Crude slipped 3.89% and 4.51%, respectively.

US Dollar weakened across the board, including versus the Gold, while stock markets surrendered earlier gains to turn lower as investors, concerned about Greece's and China's economies, withdrew from riskier positions. Weak fundamentals from the world's second largest economy reduced appetite for stocks, along with Greece's decision to hold a presidential vote two months earlier, increasing uncertainty over the country's transition out of its Troika's bailout. Gold is considered as an alternative investment to riskier assets such as equities. Weakness in the US currency also makes dollar-denominated precious metal more appealing investment opportunity.

At the same time, the generally strengthening US economy as well as rising employment helped boost tax receipts, leading to a narrower budget deficit in November compared with the same period in the previous year, according to the Treasury Department. Washington spent $56.8 billion more than it received, compared with a $135.2 billion shortfall last year. The Treasury in October said the government had accumulated a budget shortfall of $483 billion, or 2.8% of gross domestic product in the 12 months through September 30, the least since 2008. The Congressional Budget Office said in August that it expects the deficit to shrink to 2.6% of GDP this fiscal year.





Japan, China, Eurozone to publish industrial production data on Friday

On Friday, the most important fundamental news will be connected with the manufacturing production in a number of countries, which is a rather strong indicator for economic conditions in different countries. This data will be published in Japan, China and the Eurozone. Alongside, there is retail sales statistics in China, employment change in the Euro area and the PPI index in the US that will be released tomorrow and is likely to have impact on the price of Gold.
© Dukascopy Bank SA

XAU/USD jumps above down-trend despite bearish forecasts

The XAU/USD cross has breached the most important resistance line, represented by the long-term downtrend and is now developing above this level. Therefore, a descending triangle pattern has been confirmed to the north, meaning that the pair has all opportunities to gain further value. At the same time, there is a chance for Gold to return back, in case the US currency recovers in the foreseeable future and economic conditions improve globally. At the moment the most considerable resistance is represented by the monthly R3 at $1,281, while the downtrend changed the role to become the main support. Nevertheless, by the end of the year we would suggest the Gold to depreciate and trade in the direction of the monthly PP at $1,168.

Daily chart
© Dukascopy Bank SA

The price of Gold was little changed in course of the trading day on Wednesday, as a small correction took place and followed a major gain of a day before. The bullion fell below the weekly R1 and Bollinger band to close the day at $1,226. Even though technical indicators on a daily time-frame are still pointing to the upside, we do not expect a move to the north and assume the pair will consolidate around $1,215 on Thursday.

Hourly chart
© Dukascopy Bank SA

XAU/USD spreads (avg, pip) and volatility

© Dukascopy Bank SA







Positive market sentiment on Gold stays just below 60%

Distribution between long and short opened positions for Gold versus the American dollar on the SWFX market remains broadly unchanged. In course of last 24 hours, the sentiment returned back to the level seen on Tuesday, as at the moment 59% of all positions are long on the yellow metal, compared to 58% a day ago.

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