Gold: Bulls face a wall of risk-on headlines, although Fed far from hiking

• Gold is making sone positive headway, although faces upbeat trade-deal headlines and combative US dollar.  
• Stock markets recorded all-time highs amid a massive effort from the Fed to provide liquidity.

Gold prices are up 0.50% on the day, combatting a robust US dollar and promising trade-deal headlines while gold for December delivery on Comex gained $3.40, or 0.2%, to settle at $1,460.30 an ounce. At the time of writing, spot gold is trading at $1,460.71 having climbed from a low of $1,450.15 to a high of $1,462.99 so far.

The allure of gold in a portfolio

The US dollar has given back some ground which has allowed gold prices to rise, although the DXY is barley off its recent highs and holds in bullish territories while above 98 the figure and the 21 4-hour moving average – Federal Reserve Chairman Jerome Powell, in remarks in the Tokyo open yesterday, outlined an optimistic view of the US economy but signalled that low inflation would likely keep rates low.

“Powell may see the glass as ‘more than half-full’, but the market is placing a wager behind the scenes. The yield curve has gradually flattened over the past two weeks, despite apparent progress on the trade file, meanwhile equity markets recorded all-time highs amid a massive effort from the Fed to provide liquidity,” analysts at TD Securities argued who are expecting that further deceleration in growth will ultimately provide the market with the impetus to pressure the Fed into cutting rates twice more in the new year:

“Notwithstanding, the asymmetry in the US central bank’s reaction function suggests that while the Fed may cut rates, they are far from hiking and are likely to allow inflation to creep higher, thereby suppressing real rates and maintaining the allure of gold in a portfolio.”

Trade-deal headlines contribute to risk-on markets

Meanwhile, promising trade-deal headlines have kept spirits high in recent trade with the US dollar and US stocks maintaining their positive forms which may hinder gold’s bullish progress at this juncture. The latest upbeat snippet of trade news came with President Donald Trump. During an Oval Office event overnight, Trump said that Washington and Beijing were nearing a trade deal. Also, China’s Commerce Ministry confirmed that the top Chinese and US negotiators agreed on talks toward a preliminary “phase one” deal in a phone call.

Gold levels

Bulls seek a close beyond the  21st Nov lows that meet the 38.2% Fibonacci of the 20th Nov swing high to recent lows at 1463 which guards a run to the 21-DMA and the 61.8% Fibonacci of 1469. Higher up, the 50-DMA is located at 1479 ad recent aforementioned swing highs.   the 200-DMA comes in at 1420 below 1445 12th Nov swing lows.