Gold Prices seemed steady during past days as fundamentals regarding the shiny metal seem to be rare forcing most analysts and market participants, to turn attention to news involving the global economic stage.
A significant development in the market is China easing its high-tech industrial development push.
This matter is strongly related to “Made in China 2025,” a target set by the Asian tech giant, to dominate global interaction, in the industry.
Of course, an equally strong opposition has been viewed by the United States, with many actions to control the situation being displayed.
The ease on China’s activities towards its pre-mentioned target, has come due to an improvement of the relationship between the US and Chinese government in the previous weeks.
A sign confirming this is the fact that China has made its first major U.S. soybean purchases after they stopped for six months.
As the trade issue between the US and China eases, Gold prices are also strengthened even more as risk is lifted off the table.
However, the positive developments on the US Sino matter, could pressure other areas like Europe or Japan, as their products could now be left on the shelf, under this agreement as studies show that trade tensions have encouraged many companies around the world to reconsider their investment strategies and value chains.
On other regions, Europe’s economic slowdown is also very notable.
Today, the ECB is expected to announce the end of its massive QE program formally, however doubts remain as to whether such a scenario will materialize.
A small note could be made to France’s inner problems but also to Italy’s questionable finances which also create some instability in the area.
Most importantly though a slowdown in Europe could be the reason, markets are turning to Gold and its ability to be used as a safe haven, during times of significant risk and uncertainty.
Furthermore, in the UK the situation with Brexit is not easing risk at all, for the time being.
Yesterday, Prime Minister Theresa May survived a confidence vote by the Conservative Party.
However, the majority of lawmakers indicated parliament was heading towards a deadlock over Brexit.
It is said that the UK prime minister may need to provide further clarification on the deal to reassure the doubters.
In the UK, uncertainty and risk is so high, on the Brexit front, that any scenario is possible, which leads traders and market participants no other choice but to turn to the yellow metal, seeking some comfort in its increasing value.
On the contrary, Gold prices movement could have remained somewhat muted during the past days, as yesterday the 10 year treasury yield, moved higher to reach 2.886%, consequently supporting the USD.
Please note, analysts continue to view the risks tilted to the down side for the USD in 2019.
This could be acting as a boost for Gold prices which tend to move in the opposite direction of the greenback.
As a conclusion, the market now awaits next week’s FOMC meeting for Gold to make a move, with a more dovish tone towards the USD being expected.
The precious metal’s latest activity has been between our 1252.15 (R1) resistance level and the 1239.50 (S1) support level, in a clear sideways movement.
From a bullish perspective, if the shiny metal is to break above the 1252.15 (R1) resistance level then the next stop could be the 1261.01 (R2) resistance level.
In this scenario the upward run since the 13th of November will be continued and this could be an indication that Gold could be aiming for higher grounds.
In a bearish scenario, if Gold drops below the 1239.50 (S1) support level then the next stop could be the 1230.00 (S2) support barrier.