 "Here's how to trade Gold on December 27; Check support, target and more")
Gold: Up on mixed US data and flattish US Dollar
Performance
On December 26, spot gold rose on flattish US Dollar and mixed US weekly job data.
The metal, at the time of writing this report, was changing hands at $2629, up around 0.45 per cent on the day. The intra-day range has been $2619-$2639.
The MCX February gold contract was at Rs 76,758, up around 0.64 per cent.
Data roundup
Also Read
The US data were mixed. US weekly jobless claims (December 21) came in at 219K Vs the forecast of 223K, whereas the continuing claims at 1910K were way higher than the forecast of 1881K. Continuing claims rose to the highest level in at least three years indicating it is taking longer for out-of-work people to find a job.
Upcoming data
Today’s US data include advance goods trade balance (November).
China’s industrial profit data (November) will also be released today.
US pending home sales (November) and housing prices (October) will be released on December 30 and December 31, respectively.
US Dollar and yields
The US bond yields continue to remain buoyant despite a string of subdued US data of late as traders are focusing more on the Fed’s monetary policy guidance rather than data.
The ten-year US yields at 4.62 per cent, the highest level since May 29, were up nearly 0.64 per cent on the day. The US Dollar Index at 108.17 was down around 0.02 per cent, though not very far from the cycle high of 108.54 made on December 20. The two-year yields at 4.35 per cent, highest level since November 22, were up 0.35 per cent on the day.
ETF
Total known global gold ETF holdings rose for the third straight day to 83.21MOz, the highest level since November 25, on December 25.
Bloomberg reported that investors added a net $1.4 billion to State Street's SPDR Gold Shares on December 23, which, increased the fund's assets by 1.9 percent to $73.8 billion; thus, recording the biggest one-day increase in at least a year.
Outlook
December, after January, has been the best month for gold as the yellow metal has usually generated positive returns in December. Gold will need to close above $2655 (November closing level) to give a positive return this month.
The metal is expected to trade with a positive bias into the year-end on positive ETF flows, somewhat subdued US data and China’s stimulus expectations. The yellow metal may test the crucial resistance in $2667-$2670 zone; however, traders need to be mindful of the surging US yields.
Support is at $2614 (MCX February gold contract Rs 76,300)/$2600 (Rs 75,900)/$2581 (Rs 75,400). (Disclaimer: Praveen Singh is an associate VP of fundamental currencies and commodities, Mirae Asset Sharekhan. Views expressed are his own.)