The move higher in December saw gold move to a then six month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that. For a couple of weeks before the push higher gold consolidated a little resting on support at $1240 after making a strong rally back towards this level, which had become significant when it offered reasonable resistance halting its climb a couple of months ago.
After struggling with the resistance level at the $1240 level for several weeks, it fell back to another key level of $1200 where it bounced off strongly. The $1240 level provided some support in July and more recently pushed gold lower in October, so it is significant that it has now broken higher. The market will now be watching the $1300 level as this level was significant earlier last year.
For the most part through October and November last year gold had made a home in between two key levels of $1200 and $1240, and the markets were watching closely to see which way the next big move might be. Gold has received both support and resistance from the $1200 level in the last few months and didn’t appear to be in any rush to move too far away. The $1240 level was significant several months ago when gold received some short-term support there and subsequent resistance.
Ongoing concerns over the United States - China trade dispute and its potential impact on global growth have continued to support gold. It has been reported that U.S. President Donald Trump and Chinese President Xi Jinping are unlikely to meet before 2nd March, which is the deadline the countries set for reaching a trade deal. In other news, last week U.S. unemployment benefits dropped from a 1 1/2 year high to 234,000, as economists polled by Reuters had forecast claims falling to 221,000. The U.S. Federal Reserve kept interest rates steady and increasing concerns about global growth have generally kept equity markets subdued. A sign of the struggles was India cutting interest rates unexpectedly and data showing that Germany's economy had slowed in December, stoking fears of a broader slump in Europe. Former U.S. Federal Reserve Chair Janet Yellen has said that the central bank's next move may well be an interest rate cut if weakening growth around the world starts infecting the U.S. economy. "Of course, it's possible. If global growth really weakens and that spills over to the United States where financial conditions tighten more and we do see a weakening in the U.S. economy, it's certainly possible that the next move is a cut," she said. "But both outcomes are possible."
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