Gold price is as solid as it can be, thanks to the risk-off trade which is only picking up more momentum. With the ongoing weakness in the dollar index, I think it is highly likely that the gold may touch the level of 1265 or even 1270 by the end of this week.
The new catalyst behind this move would be the upcoming US GDP data and the US core durable good number. The expectations are that the US GDP q/q number will print the same reading as the last quarter which was 3.5%. And the US core durable good order data is expected to come more robust, the forecast is for 0.3% while the previous number was 0.2%. Any weakness in these numbers is likely to push the price of gold higher.
Another factor which is also going to support the risk off trade is the ongoing situation about the US government shutdown. The House has backed president Trump in partial shut down of the government unless President Trump gets the funds for this proposed border wall. A partial government shutdown or the full government shut down, both of them are going to create an undesirable environment for investors and equity traders are likely going to push the markets lower.
Renewed U.S-China tensions have already made the uncertainty clouds darker and it appears that the negative narrative is here to stay. Hence, it is likely that the current weakness in the market will continue into next year. Of course, this could all change, if the Fed changes their stance towards their monetary policy, after all, the hawkish monetary policy is one the significant factor which has created the chaos in the equity markets.
Crude and Brent both are up today but still down nearly 10 percent for this week. In fact, the crude price is set to record its worst quarterly fall in four years and this is despite the fact that OPEC pledged to cut production. Of course, the issue is with the higher US stockpiles and the US production and OPEC has no control over that. On top of that, we have feeble global economic growth and chances of minor recession over in the US are also surfacing. Under these scenarios, the oil glut becomes a massive issue for the oil traders. In order to control this glut, we need new measures, this should include the US.
In terms of technical analysis, I think it is likely that the price may start to consolidate at its current levels. The bigger support is at $45 and the resistance is at 50.
As for the crypto market, the Santa rally is here and it is building its momentum. The Bitcoin price is still above the critical level of 4K and as long as we stay above this, it would send a strong bull signal for the market. Going into 2019, fundamental are likely to work in favour of Bitcoin and the Bitcoin ETF is only a matter of time. I expect this to happen in Q1. The stable coin industry could become even bigger as there are reports that Facebook is planning its stable coin, this would be the best use of case of blockchain technology and it would only encourage other market leaders to follow this.
