Gold took advantage of the weakness of the US dollar and is trying to storm the important resistance level of $ 1,225 per ounce. A portion of disappointing statistics on industrial production and the real estate market, moderate pigeon comments by Fed representatives and a fall in the likelihood of an increase in the federal funds rate in December and March played a bad joke with the USD index. The precious metal is traditionally regarded as an anti-dollar, so the weakening of the main competitor plays into the hands of the bulls at XAU / USD.
Dynamics of the likelihood of a Fed rate hike in December
The acceleration of the US economy under the influence of the fiscal stimulus, the tightening of the monetary policy of the Fed and the high attractiveness of securities issued in the United States are old drivers who are far from USD index. First, the effect of tax reform is gradually melting, and Reuters experts predict a decline in GDP growth to 1.8% in 2020, and also raise the chances of a recession over the next 24 months to 35%. Secondly, at the final stage of the business cycle, raising the rate does not lead to an increase in the yield of treasury bonds, which makes it doubtful of Washington's ability to finance rapidly growing debt. Third, by the end of autumn, US stock indices had lost all the achievements gained since the beginning of the year. These factors make it possible to call the medium and long-term outlook for the dollar "bearish."
Gold receives support from the physical asset market. Let Swiss exports to India slow down to 11.3 tons in October, which is the worst figure in the last five years, and deliveries from a European country to China amounted to a modest 34.3 tons, central banks continue to buy precious metals, and capital outflows from ETFs in October November were replaced by tributaries in the amount of 23 tons and 13 tons. Regulators from Russia, Kazakhstan, and Turkey showed increased activity. Reserves of the first rose to 66.43 million ounces. For comparison, the People's Bank of China, 59.24 million ounces. When gold flows from the West to the East, as it was in 2013, we can talk about the "bearish" trend in XAU / USD and vice versa. The physical market is the precious metal peculiar airbag. On the derivatives market, it is expressed in support within the trading range of $ 1,185-1215 per ounce. While the quotes are holding higher, the bulls have good chances to continue the rally.
If we talk about the medium and long-term investment horizon, the optimistic outlook for gold is confirmed not only by the potential weakness of the US dollar, but also by the growing risks of a slowdown in the global economy. When stocks, oil, and US Treasury yields fall, it's time to talk about global GDP reaching a ceiling. According to the IMF, in 2019-2020, the indicator will slow down, which traditionally increases investor demand for safe-haven assets.
Technically, the inability of the bears on gold to keep quotes within the range of $ 1,185-1215 per ounce indicates their weakness. A confident assault on resistance at $ 1225 and $ 1240 will open to the bulls the road to the north in the direction of target by 200% using the AB = CD pattern.
Gold, the daily chart
