How long can gold benefit from firmer market sentiment?

Gold price remains on its direct way to snap two-week uptrend. The US data reinforce the dollar’s recovery but firmer sentiment is sufficient to keep gold buyers hopeful.

US Gross Domestic Product is expected to confirm initial forecasts for Q3, suggesting further uptrend for the Gold Index, meanwhile, the several news headlines on developments linked to Russia and China are widely eyed by traders and investors for obvious directions.

Gold price was able to hold at the current level trading at $1813.75 per ounce versus the previous closing price of $1814.19 after retreating from a one-week high as traders await the key Q3’s US Gross Domestic Product.

Mixed market sentiment could be an additional factor challenging the precious metal prices and year-end signals. After initially refreshing the one-week high on the softer US Dollar, gold price reversed gains late Wednesday as the dollar celebrated firmer US data adding extra challenges to market sentiment.


On Wednesday, US Conference Board’s Consumer Confidence jumped to the highest levels in eight months with the latest print of 108.3 for December, compared to the market forecasts of 101.0 and the revised prior readings of 101.40. It’s worth noting, however, that softer reading of the US Existing Home Sales for November, 4.09M MoM compared to 4.2M expected and 4.43M prior, challenged the dollar afterward.

Following that, the US Dollar Index (DXY) printed the first daily gain in three even as it retreated to 104.22 by the end of Wednesday. Given the US Dollar’s inverse relations with Gold, the firmer Dollar Index impacted gold price.

Along with the firmer data, challenges to the sentiment, originating from Russia and China, also seem to probe the gold price. Ukraine’s Volodymyr Zelensky is visiting Washington. US President Joe Biden said that the United States shares the same vision of a “free, independent, prosperous and secure Ukraine”. On the other hand, Russian President Vladimir Putin announced he would increase the country’s military potential.

Doubts about China’s Covid conditions also challenge the Gold Index, but, the China’s actual preparedness for more lockdowns is a negative factor for gold. Gold prices suffered as the US dollar strengthened and US Treasury yields rose. In addition, continuous Covid lockdowns in China hindered demand for jewellery from one of the world’s largest consumers of precious metals.

In light of the latest challenges facing gold price, largely due to the firmer US data and risk-negative headlines, the United States Gross Domestic Product for the third quarter and Core Personal Consumption Expenditure will be crucial for immediate price action and directions.

The US GDP is expected to confirm 2.9% Annualized growth in Q3 while the Core PCE will also meet the initial forecasts of 4.6% QoQ during the stated period. As a result, the softer US numbers may allow the Gold buyers to return.

On the other hand, the Russia-Ukraine developments got less attention during the previous weeks, which in turn suggests no major negatives for gold despite the latest negative headlines surrounding the geopolitical issues. Further, China’s readiness for more stimulus and opening of the economy could replace the Covid concerns and can favour the Gold Index.