Gold in this week gained over $22 to close at $1196 on account of a weaker dollar and uncertainties still mounting over policies which U.S president elect Donald Trump might take upon next week when he joins office from 20th.
Gold remains bullish and is poised for more upmove considering the safe haven buying which has spurred to shield from the cloud of uncertainties in the coming weeks.
Technically gold closed higher breaking the long term trend line resistance of $1174 on the weekly chart.
On the higher side, chart shows a resistance at $1228 which is also confirmed by the parallel long term trend line.
Gold can be bought for the target of $1225-$1228 and even higher for the coming week.
It can go higher to $1248 which is its next key resistance on the chart
For positional traders stop loss can be placed around $1182.
Gold retreated from seven week highs of $1204 on Friday as U.S dollar gained some strength back, but continued political uncertainties in U.S supported the yellow metal demand.
Dollar found some demand after comments made by market looking strong.
But the dollar still remained under pressure post President Elect Donald Trump’s conference where he failed to offer details on his promises to boost fiscal spending and cut taxes.
Gold found support at $1187.5 before rebounding towards $1196.
Uncertainty is at paramount level enveloping the global financial markets with a thick cloud over the future course of stability and growth. Many economic and political events are lined up in this year which are causing more unrest among the investors raising concerns over the short medium term outlook of the equity/commodity markets for returns as well as investment opportunities.
Gold which is, perhaps now can be regarded as the second best option to fight uncertainty has been on the rise since 2017 started, but here lies a key confusing element of price movement when compared to dollar which is still hovering near its all time highs but yet the gold demand seems to spur and the prices are going northwards irrespective of the higher dollar. This move defines the markets have digested the stronger dollar and thus its making low to no impact on the Yellow metal as well as other dollar denominated commodities.
Dollar which has been on a tear since the last U.S Federal policy which increased the interest rate pushing the dollar index to all time highs is having no clear impact on either metals,oil or equities rather these three are pushing higher. Dollar is regarded as the safe haven in today’s scenario but the appeal though attracting investments, it is still not much conclusive seeing the price movement of Gold and other precious metals although another 5% rise will definitely change the perspective which is lingering at the moment.An argument is still on that prices of precious metals may not increase much if the dollar remains strong which it will seeing the incoming turbulence in the coming months.
Current scenario is suggesting large funds are flowing into Japan , America , Europe whereas the emerging markets are actually seeing a sell off.
Indian market is battling with its own set of problems caused due to demonetization and the road ahead with the yearly budget round the corner.
Trades are a bit tricky as there is a chance to get chopped on either side that is get trapped on either of the call of going long or short given the unorthodox price movements.
Gold can be bought on dips as the price might not see the lows due to the rise in global uncertainty and the lined-up political events in this year.
U.S Fed has pointed out at 3 rate hikes in the current year this weekend which might lead to even more stronger dollar though it is facing resistance at higher levels.
Gold prices today gained in Asian trading hours rebounding from recent lows which was a result of Hawkish commentary by the Fed more than the rate hike. A persistent stronger U.S dollar index is still capping the positive movement in the yellow metal.
Gold is trading a 0.48% or $5.45 higher with silver following up with a 1.28% or $0.205 gain.
Gold prices had fallen overnight to settle at 10 month lows on account of risk on trades in developed markets across the globe.
Demand for the yellow metal has fallen in India due to liquidity crisis caused by demonetization drive who is one of the largest importer of physical gold.
Weekly Gold chart suggests a support at $1131.5
Weekly Silver chart suggests a support at $15.850
Last night Federal Reserve of America hiked the interest rate by quarter of a percentage point as expected along with a strong hawkish commentary. A 3 time rise of interest rate in the next year and similar pattern till 2019 was the forecast by the Fed which sent the equity as well as the commodity markets spiraling down with Dollar index the key beneficiary gaining over 1%.
Since morning yet again the dollar index is gaining momentum as the day progresses with a hike of 0.43% at 102.47 last checked during the opening hour of European trading session.
Now what lies in store along the path with a Higher Dollar index? its precious metals as well as emerging markets which are feeling the heat of a stronger dollar with Asian markets closing in red with substantial cuts excepting Japan which traded higher on account of a weaker yen, India trading almost flat and European markets trading modestly higher with a positive bias, also American index futures showing a hint of green too.
This suggests fund flows into Developed markets rather than Emerging markets, which was earlier vice versa in this year with EMs getting most of the attraction around the globe.
Dollar index technically has room for more upside with gains possibly facing resistance around 102.81 level according to the bullish trend line where as a breakout above this level opens up the corridor towards 104 mark.