Daily Digest:
w/c 24th June - a relatively light data week, with spotlight on US GDP and Durable Goods Wednesday, then the Fed’s preferred inflation measure, the MoM and YoY PCE data on Friday



74% of retail CFD accounts lose money

BUY - rate is expected to increase, i.e. the first currency gains value against the second currency.
SELL - rate is expected to go down, i.e. the first currency is expected to lose value against the second currency.

Gold is a special and rare metal, the physical and chemical characteristics of which have always fascinated humankind. Its chemical element symbol Au and its atomic number 79, gold is a yellowish/reddish extremely ductile and malleable metal, which has always lent itself well to jewelry work.

Its superior electrical conductivity and various other physical/chemical features have rendered it indispensable in modern electronics.

Gold was first smelted by the ancient Egyptians in around 3,600 BC. Ancient Mesopotamians used it for burial masks and other intricate jewelry pieces.

Its value never questioned, gold has always been a centerpiece of the ambitions of those looking to acquire wealth and power through it. It triggered countless gold rushes, wars and minor conflicts throughout history. Untold numbers of people perished for it/due to it.

That said, with the possible exception of now emerging cryptocurrencies, the world has never known a better and more reliable store of value than gold.

Where/how is gold currently produced?

Gold mining takes place on every continent, with the exception of Antarctica. The technologies currently used for the extraction of gold are obviously a far cry from the manual panning and sluicing of the Klondike gold rush era.

Industrial-scale mining is the only approach that makes long-term economic sense. Gold deposits as poor as 0.5 parts per million can be economically exploited this way.

Those hoping to catch an actual glimpse of the yellow metal in such deposits will be disappointed however. A minimum grade of 30 parts per million is necessary for gold to be visible to the naked eye.

The top gold producing countries are interestingly those with the largest economies. China, Russia, the US, Canada, Australia and South Africa are right up at the top of the gold pops.

Short of outright trading gold, traders can gain exposure to the precious metal by trading the currencies of major gold-producing countries.

Factors that drive the price of gold

Gold is generally considered a safe haven asset, for obvious reasons. As such, it makes a great refuge for investors in times of geopolitical strife and uncertainty. Market meltdowns can produce an exodus to gold as well, so these are definitely factors to consider when analyzing the price of gold.

Other such price-drivers are:

– the value of the USD. The two seem to be inversely correlated. When the USD value goes down, the price of gold tends to go up. This happens because a weak dollar increases the value of other currencies, which in turn increase demand for commodities.

– central bank reserves. Central banks amass gold as a reserve asset. Exactly why they do it is subject to discussion, but the safe haven nature of the metal is obviously a major factor in this regard as well.

– interest rates. This correlation is somewhat less obvious. Some would say it may not even exist. The bottom line in this regard is however that the price of gold tends to go up when the money supply is plentiful and it goes down when there’s not enough money to go around.

– demand on the part of the jewelry industry.

Gold December 2023 Futures Contract

Stays Buoyant; Risks Remain Bullish

A Monday rally up to 2019.9, breaking past 2011.9 resistance, to build on last week’s push higher to 2004.5, to reinforce the 20th November turn higher from 1967.2, to sustain bullish pressures from mid-November bounce from 1935.6, to maintain the core October uptrend from 1823.5, surging to its highest since July at 2019.7, to keep a bullish threat for Monday.

Day trade setup

  • We see an upside bias above 2019.7/22.1 for 2028.6; breakout targets 2039.0, 2043.2 and 2052.8.
  • But below 1988.6 targets 1979.9; under here aims for 1967.2, 1958.8 and 1953.5.

Gold Calendar

11/29/2023 EU Consumer Confidence; German CPI; US GDP and PCE (QoQ)

11/30/2023 Chinese PMI; German Retail Sales; German Unemployment; EU CPI; US PCE (MoM and YoY); Canadian GDP; OPEC+ Meeting

12/01/2023 Global PMI from S&P Global; US ISM PMI; Fed Chair Powell speaks

View Full Calendar

BUY - rate is expected to increase, i.e. the first currency gains value against the second currency.
SELL - rate is expected to go down, i.e. the first currency is expected to lose value against the second currency.

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