Gold – Market’s misery translates into gold luster

After posting strong gains last week, gold prices continue to move higher in the Monday session. In the North American session, the spot price for one ounce of gold is $1265,65, up 0.77% on the day. There are no U.S releases on the schedule.

Gold prices jumped 1.40% last week and the base metal has climbed to 6-month gains on Monday. The equation for the sharp gains has been straightforward – a meltdown in the equity markets has sent jittery investors flocking to safe-haven assets such as gold.

U.S numbers were mixed on Friday. Final GDP came in at 3.4%, revised slightly from the initial reading of 3.5% in November. This was shy of the estimate of 3.5%, but still points to healthy economic growth in the third quarter. Durable goods reports were well short of their estimates. Core durable goods orders declined 0.3%, short of the estimate of 0.3%. This marked the first decline since May. There was better news from durable goods, which rebounded with a gain of 0.8%, after a plunge of 4.3% a month earlier.

Investors were braced for a rate hike last week from the Federal Reserve, but had hoped for some “compensation” in the form of a dovish rate statement, given the turmoil in equity markets and signs that the U.S. economy may not be able to continue its red-hot performance. Instead, policymakers maintained plans to continue raising rates. Most significantly, policymakers did not remove the critical phrase “further gradual increases” from their statement. At the same time, the dot plot forecast was lowered for 2019, from three rate rises to two. Just a few months ago, there was talk of a “rate hike every quarter” for 2019, but the Fed has made a U-turn in monetary policy. The policy of gradual rate hikes bears much of the responsibility for the volatility in the markets, and the message from the Fed that more hikes are coming could mean more turmoil in the equity markets and further gains for the gold.

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XAU/USD Fundamentals

Monday (December 24)

  • There are no U.S events

XAU/USD for Monday, December 24, 2018

XAU/USD December 24 at 10:45 EST

Open: 1255.98 High: 1267.26 Low: 1255.98 Close: 1265.65

XAU/USD Technical

S3 S2 S1 R1 R2 R3
1220 1236 1261 1284 1306 1326

In the Asian session, XAU/USD posted considerable gains. The pair posted slight losses in the European session but has reversed directions and headed higher

  • 1261 has switched to a support role
  • 1284 is the next resistance line
  • Current range: 1261 to 1284

Further levels in both directions:

  • Below: 1261, 1236, 1220 and 1204
  • Above: 1284, 1306 and 1326

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.