Gold prices extended their rally for a third consecutive day yesterday. XAUUSD steadily traded to $1,531.05 where it peaked for the day. By the end of the New York session, it had settled at $1,528.78.
US Data Print In Line With Expectations
Yesterday, only third-tier data from the US were released. The final manufacturing PMI report for December slightly missed forecasts when it printed at 52.4 versus the 52.5 forecast. Meanwhile, the unemployment claims report for last week came in as expected at 222,000.
Risk Aversion to Dominate Market Sentiment?
Looking at the performance of currencies in yesterday’s trading, it seems as though risk aversion dominated yesterday’s trading. The dollar was up against all of its major counterparts except for the Japanese yen. Meanwhile, it also gave up ground to gold.
Earlier today, gold prices continued to surge. In fact, XAUUSD tapped its four-month highs during the Asian session at $1,540.71. This price action happened after the US confirmed that it launched missile attacks on Baghdad which consequently killed an Iranian military officer. It also did not help that North Korea’s official newspaper cautioned against an attack happening soon.
If risk aversion lingers on in today’s trading, we could see XAUUSD score its fourth consecutive winning day.
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Gold Price Outlook
On the monthly time frame, we can see that gold prices are trading above its consolidation for the past four months. In fact, this consolidation which ensued after a strong bullish rally, has formed a bullish flag. With the current price of gold already above the flag, it’s possible that there could be enough buyers in the market to push XAUUSD to the next resistance level at $1,775.87. This price is where the precious metal hit highs in September 2012.
On the other hand, if this month’s candle closes as a shooting star or doji it could signal that there are still sellers in the market. Reversal candles could mean that XAUUSD may move lower to test support at the rising trend line (from connecting the lows of August 2018, November 2018, and May 2019).
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