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Gold Fundamental analysis 

Gold prices fall as yields rise in risk-on trade, tarnishing its appeal, December FOMC meeting minutes in focus.

Gold prices fell as the risk-on mood translated into higher bond yields, sapping the appeal of non-interest-bearing assets (as expected). Hopes for a breakthrough in US-China trade talks seemed to be at work after negotiators from Washington DC extended their stay in Beijing by a day.

GOLD PRICES FOCUSED ON FOMC MEETING MINUTES

The spotlight now turns to the release of minutes from December’s FOMC meeting. Official forecasts released after that sit-down envisioned two interest rate hikes in 2019. For their part, financial markets are pricing in standstill. Speculation about the likely path toward reconciling this disparity is likely to shape price action in the commodity markets.

If the Minutes document presents a relatively upbeat Fed that makes the case for continued tightening, a rise in Treasury yields and the US Dollar is likely to weigh on gold. 

On the other hand, a cautious tone might be interpreted as ratifying the markets’ dovish disposition. That will probably help gold as the Dollar and bond yields decline. Hopes for a diminishing monetary policy headwind may buoy risk appetite too, 


GOLD TECHNICAL ANALYSIS

Gold prices produced a bearish Dark Cloud Cover candlestick pattern, hinting a top may be taking shape. From here, a daily close below support at 1282.27 exposes the 1257.60-66.44 area (former resistance, rising trend line). Alternatively, a rebound above the 1302.97-07.32 zone initially targets a minor barrier at 1323.60, followed by a trend-defining ceiling in the 1357.50-66.06 region.