Gold prices picked up some strength and followed to capture the markets attention, as we enter the last 10 days of November.
During the past days, the US dollar weakened, displaying its biggest weekly drop in two months, after U.S. Fed officials referred to a potential global slowdown, leaving the market in doubts over how far the rate-hike cycle has left to run.
However, the Fed has hiked rates three times in 2018, turning gold into an undesirable instrument due to its adverse relationship to the event but also, a fourth rate increase is expected next month.
At the moment, we are going through a very quiet week for the US as the Thanks Giving holiday kicks in, along with a week of not so significant financial releases which could make a case for a muted reaction for the USD.
Though looming fundamental news like the US Sino matter could step to the center of attention if a breakthrough or update is made public.
We do not support the opinion and broad release of reports indicating that the US economy is in a weak spot or that the Fed is turning dovish. Rather, we could say, the USD is having a break, only to return shortly.
Yesterday and today Gold prices rose simultaneously as bond yields dropped amid risk aversion, increasing the relative appeal of non-interest-bearing alternatives.
Today, London’s gold market the London Bullion Market Association (LBMA) stated an average of about $37 billion worth of gold was traded each day during last week, including metal for delivery in Zurich, World Gold Council estimates, based on 2016 data, were between three and six times higher.
LBMA is the largest over-the-counter gold traded market in the world and has started making its trading activities public, in an attempt to bring more transparency.
It is making its information public for the first time, bearing in mind that LBMA has its roots back in 1676.
The information released can be useful to the average trader as a metric of statistics if the information would continue flowing.
Keeping statistical data in hand, can help traders or analysts to calculate approximate future inflows and outflows or make different comparisons between periods.
Moving on to discuss Gold demand and supply levels, a case could be made if Gold is in for a comeback and if it can reach yearly 2018 highs.
Starting with demand, the precious metals is needed by sectors like jewelry, technology, investment, and Central Banks.
For example Russia has been building a significant quantity of Bullion in its reserves and could be demanding more considering the way it has bought Gold in the past years.
In more detail, central banks buying gold could dramatically result in prices spiking along with foreign market disruptions in supply like India could also send create positive momentum for Gold prices.
Furthermore, geopolitical issues like the US Sino trade matter could also send the metal’s prices higher as any global interference in supply for Gold could send prices higher.
In the Asian and Arab countries consumers are used to buying gold not only as a jewelry but as a physical investment and sell it in need for fast cash.
In addition, due to the above mentioned news and updates we view the metal market with great potential for future advancement and moving into higher trading price ranges.
The metals markets could be ending a price correction and preparing for a substantial price advance.
Gold has been in a strong upward run in the latest sessions.
If the trend continues and bullion climbs even higher it may surpass the 1230 round number.
If that price is breached the next stop could be the 1232.93 (R1) resistance level and after that the 1241.18 (R2) resistance barrier.
Technically, the price action since the 15th of November allows us to hope for further advancements.
On the contrary, a bearish momentum for the precious metal could mean a drop below the 1220 round number with the next level being the 1218.64 (S1) support barrier.
After that level and below we may see the precious moving towards the 1210.66 (S2) Support barrier.