- Gold picks up bid amid relentless US dollar selling amid trade deal hopes.
- Russia’s gold buying, year-end hedging lend support to gold bulls.
- XAU/USD remains on track for the best weekly gains in over 4 months.
Gold (XAU/USD) stalled its correction from two-month highs of $1517.40 and attempted a tepid bounce near $1512, mainly in response to a fresh selling-wave seen in the US dollar across its main competitors.
Markets continue to cheer the latest optimism surrounding the US-China trade deal, where both sides are prepping up for the phase one trade deal signing. Therefore, the demand for the safe-haven US dollar is taking a hit amid increased appetite for risk assets such as the equities. A weaker greenback usually makes the USD-denominated gold more attractive for foreign buyers.
The dollar price-action is also driven by year-end holiday season induced thin market conditions, which saw the yellow metal spike nearly $7 in a matter of minutes during Thursday’s US session.
Further, the latest reports that Russia could consider investing part of its National Wealth Fund in gold combined with risk hedging into gold heading into a new year also offers support to the bullish streak seen in the precious metal.
From a technical perspective also, the upside looks more compelling, as the bullion has charted a bull flag breakout on the weekly sticks, “a continuation pattern which indicates the pullback from September highs above $1,555 has ended and the rally from lows near $1,270 registered in April-May has resumed. The flag breakout has opened the doors for a re-test of $1,557 (September high)”, FXStreet’s Analyst, Omkar Godbole, explains.
In the day ahead, a retest of the two-month high looks inevitable amid generalized dollar weakness and light trading could likely exaggerate the moves.
Gold Technical levels to consider
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