Research

Disclaimer: All information on this section is of a general nature.
Before making any investment decision, you should seek the relevant advice.

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Although down on the year, gold rangin  2019 on a strong note as it endedDecember with its best monthly gains since January 2017.

February gold futures last traded at $1,283 an ounce,unchanged on the day and slightly down from its highest level since June.However, for the year, gold is ending with a loss, the first since 2015.

According to somecommodity analysts gold has significantly benefited from shifting U.S.interest rate expectations. The CME FedWatch Tool showed that one month agomarkets were pricing at least one-rate hike in 2019. Heading into the new year,markets are now pricing only an 11% chance of a rate hike.

Although gold has strong upside momentum, some analysts are warninginvestors to not expect prices to rally in a straight line.

Bill Baruch, president of Blue Line Futures said that the yellow metalcould see some selling pressure as price push closer to $1,300 an ounce.

“As Gold treks near the psychological $1,300 mark, it will have a toughtime pushing through here without a fresh catalyst or outright U.S Dollarweakness,” he said in a note to clients. “We believe it is important tocapitalize on strength and maintain that traders should lock in some gains hereif they have followed our bullish bias over the last 90 days.”

For many Banks, $1,300 represents the high watermark for gold next year.Although a lot of banks are bullish on the yellow metal next year, many areexpecting any rally to be a grind higher. The biggest hurdle for the yellowmetal remains the U.S. Dollar.

The greenback is ending the year on a strong note, with the U.S. DollarIndex up more than 4% on the year. However, there are some currency analystswho see an end to the dollar’s run this year.

In a recent interview with Kitco News, Simon Derrick, chiefcurrency strategist at Bank of New York Mellon, said he expects a weaker U.S.economy and weaker equity markets to weigh on the U.S. dollar.
 
Posted on 2/01/2019 9:00:00 AM

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