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Gold remains subdued in mid 1550s during receding demand for safe-haven assets

  • Gold is out of favour as the US dollar perks up and risk appetite sends US benchmarks to record highs. 
  • Gold holds steady around the 4-hour moving average and along the confluence of a 38.2% Fibo. 

The price of gold is currently trading at $1,551.20 having travelled from a high of $1,558.09 to a low of $1,548.16 in a risk-on environment. Improving global growth expectations on the back of the US-China trade deal supported risk appetite, with US benchmarks on the rise, yet again, printing fresh record highs, (the S&P 500 is up 0.6% at time of writing) – subsequently, demand for safe-haven assets have receded.

Combined with the good mood surrounding the recently signs Sino/Us trade agreement, today's US Retail Sales was a boost for the US dollar, attributing to the downside in gold as well. 

However, analysts at TD Securities note that, in fact, "precious metals continue to hold a strong footing despite strength in equity markets and risk appetite in general, as recently disappointing US data and the Fed's asymmetric reaction function continue to support the market."

"Furthermore, after easing of the US-Iran tensions, it is likely the risk posed by extremely lopsided long positioning has decreased as haven buyers reduced positions. But, while gold looks to consolidate in the near-term, PGMs continue their near exponential rise to start 2020." 

Us data bucking a negative trend

Retail Sales in the United States increased by 0.3% on a monthly basis in December, the advanced data published by the US Census Bureau showed on Thursday. The results came in line with market expectations and also matched the previous month’s upwardly revised reading.

Also, the latest initial claims data were solid with claims dropping back to 203k  which was just above their historic lows of 193k in April last year. A firmer Empire manufacturing index was also encouraging.

Gold levels

Gold has fallen back to rest of the 38.2% Fibonacci retracement of the Nov 2019 to Jan 2020 highs (where it meets the Aug / Sep resistance), in a correction from the 21-DMA that has stalled at this juncture. 1528 comes as the 50% retracement of the same range and 1509 as the 61.8%. 1611 was the Jan highs


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