December gold futures have been testing the 200-day moving average for several months now which sits at 1273. There are a number of factors that are fundamental factors for the choppy two sided trade we see. On the bear side of the equation you see a most definite rate hike in December which is typically a dollar supporting, risk off event for gold. We have also seen quite positive economic data over the past few weeks that continues to support the stock market and create headwinds for the gold market. Recent PPI and CPI data that has come out this week was seen as very bearish for gold. The CPI did not come out particularly strong, but the “goods” sector number suggested that the economy is quite strong indeed. Reasons to be bullish gold are the unexpected US weekly jobless claims number rising to a 5 week high, and fund buying in the precious metals ETF’s that rose to a 3 week high. North Korea continues to be a non-issue as we have not seen any recent missile tests (over two months now). The President’s recent trip to Asia would have been seen as a damper for possible military conflict with NK as he talked with his Chinese counterpart about pressuring their nuclear ambitions.
The technicals on gold look better and better as we continue to trade sideways and build support around the 200-day moving average (green line below). We will most likely see much headwind resistance around the psychological 1300 price level (also the 38% retracement level). From there it’s the 50% retracement level of 1313, and 1325. There needs to be a solid fundamental drive for us to get to these levels, especially with the stock market so strong on prospects of tax reform looking better and better.
Dec ’17 Gold Daily Chart