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Gold regains footing over downbeat economic data

A weekly market summary for gold, Nov 11-15

SUBDUED global growth momentum granted some respite for safe haven assets as risk appetites stay measured over disappointing economic releases. Global trade optimism over a potential resolution to the 16th month long US-China trade war has limited upside gains for the precious metal as investors pivot towards riskier assets.

Upbeat market sentiment and a recalibration in portfolio exposures by money managers over aggressive monetary policy easing by central banks has led to a snag in the gold price rally (4Q). The yellow metal, though facing considerable headwinds over profit-booking activities, will remain supported over lacklustre growth conditions for the current term.

What should investors look out for in the longer term?

Financial traders are expecting US Fed policy makers to maintain interest rates at 1.5-1.75 per cent (Neutral) till H1 2020. Shifting expectations on US borrowing costs and signs of progress in US-China trade negotiations have led to profit-booking (Long Liquidation) from money managers on the non-interest yielding asset. Safe haven assets though easing off bullish gains (3Q 2019) will remain supported as global economic fundamentals remain shaky for the current quarter.

Market voices on:

We postulate for gold prices to range broadly as investors balance between looming economic uncertainties and softer geopolitical overtones in 4Q 2019.

Technical Analysis for Spot Gold (XAUUSD)

The precious metal regained composure after a steep decline (-3.6 per cent) in price levels during previous week's trading session. Gold prices illustrated for strong support at key technical level of US$1,445.00 (61.8 per cent Fibonacci Retracement Level - Swing High/Lows). Gold bulls must now break above US$1,474.00 for a continuation of the bullish trend scenario towards the next main station of US$1,492.00. Failure to hold above key support level of US$1,458.00 will trigger a mean reversion towards US$1,445.00 (Previous-Low) in the near term.

Weekly Market Assessment:
Mildly Bullish
Key Resistance Level (1): US$1,492.00
Key Resistance Level (2): US$1,474.00
Key Support Level (1): US$1,458.00
Key Support Level (2): US$1,445.00

  • The writer is an investment analyst at Phillip Futures