Gold prices continue to trade firm with near term target of $1320

Narnolia Financial Advisors

Commodities had a positive move last week. Comex Gold prices and silver moved higher after the dovish FOMC minutes and concerns over US government shutdown. Industrial metal complex reacted strongly to the US-China trade meeting held between 7th- 9th Jan 2019. Most of the base metal ended the week in green gaining 1 percent except aluminum that ended the week with 1 percent loss.

China supported the base metals rally by slashing reserve requirement ratio by 1 percent and introducing various stimulus measures to support its economic growth outlook. Furthermore, the slowing inflation figure in China for December gives the country more room to loosen its policy going forward.

Energy prices too moved positively with Nymex crude showing 8 percent rise at USD 53 per bbl. Crude oil prices are strongly moving higher ahead of oil output cuts by OPEC starting this month and firm comments by Saudi to bring the market back into balance. Natural gas prices stayed lower on forecasts of warmer weather in the US and below average gas storage withdrawals.

The gold price has maintained positive stance since last month and is trading steady towards USD 1290 per oz on shifting US Fed policy stance over its future rate hike pushing the dollar and US yields lower. Major FOMC policy members agreed to take a pause in raising interest rates in 2019. The US PMI and consumer confidence data tumbling in December increased concerns of the weaker economic outlook.

Gold prices also remained supported due to growing demand from central banks buying to diversify their reserves and strong inflows in ETFs largely due to uncertainty surrounding Brexit. Gold is expected to trade firm with the near term target of USD 1320- USD 1340 levels.