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Easing global worries keeps pressure on gold prices

Expect MCX Gold prices to remain resisted at higher levels near 38,500 levels on dollar weakness and on the downside prices may test 37,100 in the near term.

December 16, 2019 / 08:43 AM IST

Sakina Mandsaurwala

Precious metals have recently witnessed some recovery on the back of a weaker dollar lifting sentiments in the commodity markets. Gold prices remain supported at $1460/oz and traded higher by 0.75 percent at $1475/oz and Comex Silver prices rose by 2.3 percent as the fall in gold-silver ratio furthermore supported the upside in silver prices.

Base metals prices reacted positively after US President Trump gave a green signal on signing the US-China Phase I trade deal agreement. All the industrial metals gained and ended the week higher last week.

Energy complex finished mixed last week as crude oil prices sustained its last week gains and closed 1 percent higher while natural gas prices remain stuck with losses on weaker fundamentals.

Last week, gold prices tested a five-week high as US President Trump said US-China is moving closer to a trade deal. Trump approved the US-China trade deal and averted the imposition of new tariffs on Chinese goods worth $160 billion in exchange for China buying agricultural goods in return.

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This has proved positive for the global equities and as such is negative for safe heaven asset gold. Though, China officially remains silent on the trade deal agreement.

Last week, US FOMC policy kept its interest rate unchanged and signalled no change in interest rate in 202. It forecasted an increase to 1.9 percent in 2021 as the labour market continues to remain strong stating that the current rate is appropriate for sustained expansion.

The signing of the trade deal agreement will prompt investors to shift away from the safe haven metal. We expect MCX Gold prices to resist at higher levels near 38,500 levels on dollar weakness and on the downside prices may test 37,100 in the near term.

(The Author is Commodity Analyst at Narnolia Financial Advisors.)

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Moneycontrol Contributor
first published: Dec 15, 2019 08:15 am

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