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James Hyerczyk
Comex Gold
ica US dollar banknote money as financial asset, investment and wealth concept

Gold is trading slightly better, but the two-sided price action on Friday, and for that matter, this week, suggests trader indecision and impending volatility. Traders like the moves, but investors don’t.

The problem is this week’s Fed comments, higher-than-expected jobless claims and the weaker U.S. Dollar are potentially supportive, while the “phase one” trade deal news, the surge in Treasury yields and the increased demand for risky assets is restrictive.

At 11:34 GMT, February Comex gold is trading $1475.60, up $3.30 or +0.22%.

Bullish Factors

Gold rallied earlier in the week after the U.S. Federal Reserve said it would leave policy unchanged in 2020. The news suggested policymakers would not raise interest rates.

Gold soared to a one-month high on Thursday after U.S. weekly jobless claims jumped 49,000 to 252,000, or its highest level since September 2017.

Gold is also being underpinned by the weaker U.S. Dollar. The greenback has plunged against a basket of currencies this week, weakening the U.S. Dollar, while driving up demand for dollar-denominated assets like gold.

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Bearish Factors

The Trump administration has reached a phase one trade deal with China in principle, pending approval from President Donald Trump, three sources close to the talks told CNBC on Thursday.

This news is driving up U.S. Treasury yields and U.S. equity markets, reducing gold’s appeal as an investment. Remember, gold doesn’t pay you anything to hold it. So all things being equal, investors will seek the highest level of return.

Daily Forecast

We’re expecting heightened volatility on Friday since I believe we’re still in a news driven market. Furthermore, Trump still has to approve the trade deal, and officially announce a delay in the new tariffs scheduled for December 15.

Gold traders will be reacting to the price behavior in the Treasurys and U.S. equity markets.

On the data front, traders will get the chance to react to the latest data on U.S. retail sales. Core Retail Sales are expected to come in at 0.4% and Retail Sales at 0.5%.

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