GOLD

12:26, 03 December

XAUUSD - Rallies Back to $1830 as OECD Lifts Global Economic Outlook

In the last two days the XAUUSD has rallied well off four month lows below $1770 to return to near $1830. It has in the last few weeks eased away from the resistance at the key $1900 level moving to the lows after spending a considerable amount of time trading around $1900. If the XAUUSD is to continue to rally back to $1900, it is highly likely to experience further resistance at this level. In the last few weeks, the $1900 level has been providing more resistance, whereas previously it was trading comfortably back and forth around this level. It recently surged through to a six week high above $1960 before falling even more sharply returning all gains in falling to a five week low around $1850.
Up until the initial break lower in late September, the XAUUSD had rested on strong support at the key $1900 level after having moved sharply back and forth in the few weeks prior. The $1900 level will be expected to continue to provide some resistance to gold, as it seems to content to trade not far away from it. In early August, XAUUSD fell sharply from its all time high around $2075 however it was stopped well by the support around the $1900 level which has been able to buffer the fall and allow it to consolidate in the time since, even allowing it to rally back above $2000 before returning to support.


Throughout June and July, gold steadily climbed higher off support at the key level of $1675, to its all time highs. Just before its most recent surge higher, XAUUSD consolidated around then eight year highs above $1800 mid July after moving steadily higher in the previous few weeks, and this level may provide some support now that gold has fallen back through support at $1900. Throughout April to June, XAUUSD consolidated well being well supported by the key $1675 level, which set up conditions for the subsequent push higher. Just prior to that move higher, gold was trading in a very narrow range around $1730 after having recently bounced off the solid support at $1675, and the $1730 level may also provide some support should it decline.


At the start of May, gold rallied higher to reach an eight year high above $1760, again off solid support at $1675. $1675 remains a significant level and is highly likely to provide more support should gold decline, although it is now some distance away. XAUUSD has moved very well in the last six months surging higher from three month lows around $1450 up to the recent all time highs. If the support at $1675 fails, it will return to a range where it has spent the best part of this year trading in. It spent around two weeks consolidating around $1600 after the first solid rally from near $1450 before pushing higher again.


As vaccine hopes around the world lift, gold has taken a back seat as risk appetite has been boosted in financial markets. The Organization for Economic Cooperation and Development (OECD) has forecast gross domestic product (GDP) growth to reach pre-pandemic levels by the end of 2021, as it expects the global economy to build momentum over the next two years. “For the first time since the pandemic began, there is now hope for a brighter future,” the OECD said Tuesday, referring to stimulus action taken by governments around the world to offset the devastating economic impact of the coronavirus pandemic, and more recently updates on trials with various vaccines. “The worst has been avoided, most of the economic fabric has been preserved and could revive quickly, but the situation remains precarious for many vulnerable people, firms and countries.” In its latest economic outlook, the OECD said it expects the global economy to contract 4.2% this year, however worldwide economic growth would average 4% over the next two years, despite their assertion that “considerable” uncertainty remains.