Gold trades above $1520 despite broad USD strength
- US Dollar Index gains traction at start of 2020.
- Gold continues to find demand despite upbeat market mood.
- Coming up: Markit Manufacturing PMI and weekly Jobless Claims data from US.
The troy ounce of the precious metal gained $50 in December and closed the year at $1517. By adding more than $200 in 2019, the pair registered its largest annual gain since 2010. After starting 2020 moving sideways near $1520, the pair gained traction in the last hour and was last seen adding 0.35% on a daily basis at $1522.20.
Gold ignores upbeat mood
Although the market sentiment seems to have turned positive on Thursday with stock markets rising sharply following the People's Bank of China's (PBOC) decision to cut the Reserve Requirement Ratio (RRR) by 50 basis points to stimulate the economy, safe-haven gold continues to find demand after ending the year above the critical $1500 handle.
In the meantime, the broad-based selling pressure surrounding the USD, which allowed the pair to gain traction after the Christmas break, started to fade away on Thursday to cap the pair's upside for the time being. The US Dollar Index is up 0.25% on the day at 96.70.
Later in the day, the IHS Markit Manufacturing PMI and the weekly Jobless Claims will be featured in the US economic docket. Investors will be keeping an eye on Wall Street's performance as well. If major equity indexes in the US advance to fresh all-time highs on the first trading day of 2020, investors could move further away from safe-haven assets and cause the pair to reverse its direction.
Technical levels to watch for
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
