Market Outlook

31-12-19 Daily Bullion & Oil Technical Research Report

Gold

Central banks have purchased 4,538 tonnes of gold since 2008 and have recovered more than half the amount they sold between 1965 and 2008, The world official gold reserves fell from 38,347 tonnes in 1964 to 29,936 tonnes in 2008 and stood at 34,501 tonnes at the end of last month. The rise in the official gold reserves likely represents the speeding up of the de-dollarization process by Russia, China, and Europe.

Gold prices could benefit from continued de-dollarization over the long run. At press time, the yellow metal is trading at $1,520, representing an 18.66% yearly gain. Gold takes the bids to $1,515 amid the initial Asian session on the last day of 2019. While overall declines of the greenback please the buyers, optimism surrounding the major consumer and geopolitical tension adds strength into the safe-haven.

The USD keeps the losses running while declining to the lowest since July 03. The traders’ fraternity seems to adjust the year-end open positions while downbeat prints of the US Dallas Fed Manufacturing Business Index offered additional weakness to the US currency. Elsewhere, the US-China trade deal is near to its signing in ceremony, as per the South China Morning Post (SCMP) news.

The same boosted the market’s risk appetite the previous day while increasing optimism for the major gold consumer, i.e. China. Earlier, the bullion traders buoyed Beijing’s readiness to abide by the phase-one deal terms.

Also contributing to the yellow metal’s upside is the US political tussle with the Middle East as well as North Korea. Iran has openly warned theTrump administration to stay ready to bear the consequences after the US attacked Iraqi and Syrian spots over the weekend. China also registered its disagreement with the US strikes. Further, North Korea prepares for something that is unknown to the world amid the fears of further progress in the hermit kingdom’s building up of its armament.

Markets are gearing up for China’s December month NBS Manufacturing and Non-Manufacturing PMI data. The official activity numbers are likely to retrace a bit after providing a positive surprise during the latest readings. Following the same, the US second-tier housing and consumer sentiment data will be in the spotlight before the investors head to the New Year holiday.

Light trading is expected today as market participants leave hints that expectations remain in place for US stocks to continue March higher, while the dollar will soften in the New Year. The limited economic releases this week should paint a picture that US housing markets is solid, manufacturing data is steadying, and consumer confidence continues to rise.