Will January usher in a golden dawn?

The final week of a year for which the unfortunate standout memory will be the arrival of a global pandemic that has now claimed the lives of almost 1.8 million people and caused global social and economic turmoil.

Gold 2

While the arrival of a vaccine has sparked hopes for a return to normality, in the short term things remain far from normal. Rolling lockdowns and the wearing of masks have become part of everyday life as governments and central banks push the economic levers to help nurture the economic recovery and boost job creation.

Yesterday after previously threatening not to, US President Donald Trump signed off on a spending bill, that included a $900 billion relief package. With the ink barely dry, the House passed a new bill that proposed replacing the $600 stimulus checks with a $2,000 payment.

Whether the new bill will pass the Republican-held Senate remains unclear. However, there is little doubt more stimulus will arrive in 2021, as President-elect Joe Biden has repeatedly called the $900 billion package a “down payment”.

This brings us around to an update on an article to the Gold article from early December here in which we suggested opening long positions at $1810 looking for a retest of the August $2075 high.

The fundamental reasons for owning gold remain strong and are supported by the arrival of bullish gold seasonals in January. Yet further confirmation from a technical perspective is required to confirm the fundamental bullish bias.

As can be viewed on the chart below for the second time in recent sessions, gold stalled overnight from ahead of trend channel resistance, currently $1910 area.

To confirm the bullish bias from a technical perspective, gold needs to break/close above $1910ish without first falling below uptrend support $1870ish and then the band of support $1850 area.

For those who followed our suggestion in early December, we would suggest raising the stop loss on longs to protect profits to $1866, or for those who want to give the trade more room, to $1849. Upside targets are the November $1966 high, followed by the August $2075 high.

Will January usher in a golden dawn?

Source Tradingview. The figures stated areas of the 29th of December 2020. Past performance is not a reliable indicator of future performance.  This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.