Gold price gains on lower US yields, softer US dollar

Singapore (Jan 17)  Gold has traded higher over 14 of the 16 last sessions. The precious metal extended gains to $1213 in Asia. Trend and momentum indicators are supportive of further upside correction. The key mid-term resistance stands at $1219 (major 38.2% retracement on Jul-Dec decline). Support is building above the $1200 level. Decent $1200 Call expiry is due tomorrow.

In the medium term, US inflation should be a key driver for gold prices. In fact, gold is one of the most popular hedges against inflation. If US inflation accelerates on prospects of solid fiscal expansion under Donald Trump’s rule, and if the Federal Reserve (Fed) fails to tighten the monetary policy at an according speed, the rising inflation expectations could generate a larger stream towards the yellow metal. This would in turn encourage its price higher to $1240 and even to $1270 (100 and 200-day moving averages respectively).

Source: LCGnews