Gold prices continue to consolidate for 4-5 days in a row. However, on the daily chart, the momentum still remains intact near overbought conditions.
Meantime, let’s try to analyze the current most significant drivers for gold prices.
Trade War Update
Recent news suggested that the United States and China would sign their so-called “Phase 1” agreement by early January 2020. This positive news has set the overall global market condition under profound optimism.
Today, Chicago soybean futures have nudged upper over trade hopes, touching three-week high. Along with soybean, corn and wheat also have accumulated massive gains over the last few sessions.
Interim, as I peek into the current political scenario in the world’s largest economy, I see uncertainty at its highest. The majority of the Americans want Trump ousted after his impeachment by the US House of Representatives. The President is charged with abusing his office and obstructing Congress.
So, this conglomerate of positive and negative sentiments might be holding the gold prices at neutral positions.
There is always a slight thin line direct correlation between oil prices and gold prices. Right now, the WTI Crude Oil trades near its three-month high. It has met its critical resistance handle and might soon cool down, shedding gains.
As you can see in the above chart, though the Crude prices have surmounted 60.46 resistance, it seems to lack sufficient energy to grow further. The Parabolic SAR can be seen to approach the oil prices from the bottom. Anytime, it might jump above the pair, activating the bears.
Such a downfall in the oil prices might affect the gold prices too. So, try to avoid going long on the yellow metal for the time being.
Due to the lack of volatility in the last few sessions in a row, the Relative Strength Index has got stuck near 50 levels. Also, the momentum indicating Stochastic Oscillator was heading south, indicating 75+ levels.
Any sudden move to the downside would immediately bring the 38.2% Fibo. level or 1447.07 level into action.
On the 4H chart, the gold prices appear to struggle in order to make a move to either side. If the prices move in the upper direction, then it will have to tackle the overhead stubborn $1479.54 resistance.
And, on the downside, there remains a slanting support line that has been preventing the downfalls since the start of December.