Spot gold prices climbed on December 26, buoyed by mixed U.S. job data and a relatively flat U.S. Dollar Index. At the time of writing, gold was trading at $2629, reflecting a 0.45% daily gain within the intra-day range of $2619-$2639. On the domestic front, the MCX February gold contract also witnessed a rise, trading at ₹76,758, up 0.64%.
US Data Impact and Market Dynamics
Recent U.S. economic indicators painted a mixed picture. Weekly jobless claims stood at 219K, marginally better than the forecast of 223K. However, continuing claims surged to 1910K, the highest in three years, signaling challenges in the job market recovery. These mixed signals have influenced market sentiment, supporting gold’s safe-haven appeal.
Looking ahead, key U.S. data releases include November’s advance goods trade balance and China’s industrial profit data, which are expected to add further context to the global economic landscape. Pending home sales and housing price data, due later this month, could also influence gold’s trajectory.
US Dollar and Bond Yields: A Balancing Act
The U.S. Dollar Index, trading at 108.17, was nearly flat but remained close to its December 20 cycle high of 108.54. Meanwhile, U.S. bond yields remained elevated, with the 10-year yield at 4.62%, its highest since May 29, and the two-year yield at 4.35%. Despite recent subdued U.S. data, investors appear to focus on Federal Reserve monetary policy cues, keeping yields buoyant.
ETF Flows Reflect Investor Confidence
Gold ETFs recorded their third consecutive day of inflows, with global holdings reaching 83.21 million ounces on December 25, the highest since late November. A standout performance came from State Street’s SPDR Gold Shares, which saw a $1.4 billion net inflow on December 23, marking its largest one-day increase in over a year. The fund’s assets grew by 1.9% to $73.8 billion, signaling strong investor interest in the yellow metal.
Technical Outlook: Key Levels to Watch
December has historically been one of the best months for gold, second only to January in terms of positive returns. For the current month, gold needs to close above $2655, the November closing level, to ensure gains.
Analysts expect gold to trade with a positive bias as year-end approaches, supported by positive ETF flows, mixed U.S. economic data, and China’s anticipated stimulus measures. The metal faces significant resistance in the $2667-$2670 range, while support levels are at $2614/$2600/$2581 on COMEX and ₹76,300/₹75,900/₹75,400 on MCX.
Traders should remain cautious of the surging U.S. yields, which may pose a challenge to gold’s upward momentum. However, the overall outlook for gold remains optimistic as market dynamics favor the precious metal’s appeal as a hedge against economic uncertainty.
