XAU/USD
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davidshanks
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Gold faded for the third consecutive year with falling around 14% by the end of 2015. It had set on sell off rally almost through 2015 on expectations of US Federal Reserve Rate hike to end an era of low interest rate regime. Also due to weakening physical demand in two highest gold consuming countries, India and China, the bullion was set to trade in its negative territory. Gold prices peaked to $1307 an ounce in January after Swiss National Bank abandoned the Swiss franc-euro peg and the European Central Bank prospected a full-blown Quantitative Easing program to combat lower growth and inflation in the Euro land. The yellow metal found some support from Greece default issues during the June Quarter, although failed to sustain the recovery and eventually fell to $ 1080 in July on increased bets of a Fed rate hike in September. Fed surprisingly made a dovish statement at its September FOMC meeting, pouring cold water on expectations of a rate lift in 2015, also lending support to the non interest bearing gold. Later, the yellow metal marked its lowest settlement since February 2010 at $1046.10 on Dec 3 in anticipation of a Fed lift-off and on the back of an unusually hawkish ECB decision. And, finally the historic Fed rate hike was announced on Dec 16, with the US central bank raising the target range for the Fed funds rate by 25bps to 0.25%-0.50% for the first time in more than nine years.
Heading towards 2016, gold prices hover near 5 year lows as the Federal Reserve interest rate hike outlook is expected to remain the key theme next year. They have projected four hikes in 2016, raising upto 100 bps. On the positive note, other global markets like China, Europe and India are looking to extend their ultra loose monetary policy and resort to further currency debasement in order to spur economic growth. We expect Gold prices to remain under pressure till the end of 1st quarter as dollar might show up some rally with Fed’s ‘gradual rate hikes’ anticipated at its March and June FOMC meetings. And, ongoing weakness in industrial metals and oil prices exposes further downside risks. Also, Technical outlook points to have its major support at $900. While in the second session of the year, bullion might find support from disinflationary effects from US on account of sharp USD appreciation and bargain hunting at lower levels from Asian Markets. It is also expected that the Euro zone recovery will gain further momentum as the QE program continues to have intended effects on the growth and inflation outlook. Hence, a stronger euro against the greenback could also push gold prices higher towards $1200 by end of next year.
Technically, we have witnessed Gold prices breaching a falling wedge formation in July 2015 and fell to a low of $1077. After that they attempt a recovery towards $1200 levels but got resumed back to its downward trend leading prices to drop to its fresh five year lows near $1050., with a pattern target at around $900.
From the chart we see a strong support lies between $1000-$900 zone, while in the long term if yellow metal manages to hold the key support, we could see a sharp rise in the prices back towards $1200 levels.
Heading towards 2016, gold prices hover near 5 year lows as the Federal Reserve interest rate hike outlook is expected to remain the key theme next year. They have projected four hikes in 2016, raising upto 100 bps. On the positive note, other global markets like China, Europe and India are looking to extend their ultra loose monetary policy and resort to further currency debasement in order to spur economic growth. We expect Gold prices to remain under pressure till the end of 1st quarter as dollar might show up some rally with Fed’s ‘gradual rate hikes’ anticipated at its March and June FOMC meetings. And, ongoing weakness in industrial metals and oil prices exposes further downside risks. Also, Technical outlook points to have its major support at $900. While in the second session of the year, bullion might find support from disinflationary effects from US on account of sharp USD appreciation and bargain hunting at lower levels from Asian Markets. It is also expected that the Euro zone recovery will gain further momentum as the QE program continues to have intended effects on the growth and inflation outlook. Hence, a stronger euro against the greenback could also push gold prices higher towards $1200 by end of next year.
Technically, we have witnessed Gold prices breaching a falling wedge formation in July 2015 and fell to a low of $1077. After that they attempt a recovery towards $1200 levels but got resumed back to its downward trend leading prices to drop to its fresh five year lows near $1050., with a pattern target at around $900.
From the chart we see a strong support lies between $1000-$900 zone, while in the long term if yellow metal manages to hold the key support, we could see a sharp rise in the prices back towards $1200 levels.
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