It looks like December is going to end flat but focus for bullion traders will shift to January 2020 since US trade representative has said they would sign the pack without any renegotiations in the First week of January
In the week gone by MCX Gold inched higher by 0.6 percent and Comex Gold went up by 0.2 percent as political risk increased in the US.
Rupee during the week gone depreciated 0.7 percent. Gold increased even though the "phase one" trade agreement was announced. US Trade Representative said US exports to China will nearly double over the next two years although officials are yet to decide a date to sign the agreement. Beijing remained cautious ahead of the signing of the agreement.
Trump became the third US president to be impeached as the House formally charged him with abuse of power and obstruction of Congress in a historic step. The House action sets the stage for a trial next month in the Republican-controlled Senate on whether to convict him and remove him from office. However, the White House said it was confident the US Senate would clear President Donald Trump in a trial after the House of Representatives voted to impeach him.
Empire state manufacturing index for December expanded at 3.5 against market expectation of 4. Markit manufacturing PMI for December grew at 52.5 against the forecast of 52.6. Sales of existing US homes fell 1.7 percent in November to a 5.35 million, a five-month low. The leading economic index was steady at 111.6, well below expectations of a 0.1 percent advance. Weekly jobless claims fell less than expected to 2,34,000 from 2,52,000. The Philadelphia Fed Business Outlook also missed, coming in at 0.3 this month versus 10.4 in November.
The upside in gold was limited as US manufacturing production rebounded strongly in November (actual 1.1 percent versus degrowth of 0.9 percent a month ago), while housing numbers rose higher than expected (1.365 millions in November vs 1.323 million in October) and permits for future home construction (1.482 million in November versus 1.461 million October) soared to a 12-1/2-year high.
The university's final December consumer sentiment index was 99.3, little changed from the preliminary figure of 99.2, and up from November's 96.8. US consumer expectations for inflation over the longer term fell to the lowest on record in December, according to the latest University of Michigan sentiment survey. Overall, the yellow metal was upbeat in the second last trading week of the calendar year.
Going into the last trading week of 2019, the yellow metal may stay flat due to thin volumes. It looks like December is going to end flat but focus for bullion traders will shift to January 2020 since US trade representative has said they would sign the pack without any renegotiations in the First week of January. Historically, January normally given positive returns. Chinese Lunar New year will begin from 25th January 2020 hence possibly jewellery buying may pick up.
Britain will leave the European Union on January 31, 2020, hence political risk may reduce from that particular front. British lawmakers gave preliminary approval to Prime Minister Boris Johnson's Brexit bill, clearing the way for the UK to leave the European Union next month. The House of Commons voted 358-234 for the Withdrawal Agreement Bill. It will receive more scrutiny and possible amendment next month, and also has to be approved by Parliament's upper chamber, the House of Lords. But Johnson's commanding Conservative majority in Parliament means it is almost certain to become law in January.
X-mas celebrations may impact volumes next week since majority of the world countries will be in holiday mood. Monday US will release durable goods orders & new home sales. No major economic data will be releasing from any other country. We expect gold to remain in a tight range next week.
(The author is Fundamental Research Analyst - Commodities at Anand Rathi Share and Stock Brokers Limited.)Disclaimer: The views and investment tips expressed by investment expert 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.