gold price
Final US Markit Services PMI rose to 52.8 vs. the 52.2 projected and previous figure. The US Dollar strengthened and spiked by 4.7 pips vs. the Euro five minutes following the release. Gold prices spiked lower by 1.6 dollars, while the Dow Jones spiked higher by 23 points.
The latest US Markit Services PMI reading showed that the service sector is bottoming out as stock markets have projected it over the last few weeks. In June 2019, the index reached a low of 50.9. In September, the index declined to 50.7, and in November, the index reached 50.6, and since then, the PMI index has been rising. The mover higher is encouraging for stock markets investors, which has been lifting stocks ahead of the economic data as investors have been expecting higher economic growth given the significant rate cuts but the Federal Reserve and QE by the ECB. Fewer trade tensions between the US and China have also been encouraging for the markets, and a first deal between the USA and China is anticipated to be signed on January 15.
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Gold prices turned slightly lower on the heels of the better than anticipated US Markit Services PMI. The move lower might also be motivated by some profit-taking following the last few week’s impressive gains as the US raised the stakes by killing a top Iranian general in Bagdad in the previous week. The move has outraged large parts of the Middle East, and Iraq has asked American troops to leave their country. As tensions run high, traders and investors have flocked to gold and sent gold prices higher.
Technically, the gold prices (XAUUSD) remain in a short-term uptrend above the $1540 low formed on January 3, and as long as the price trades above this level, the price might reach the $1600, which the target of a large ascending triangle I mentioned in the summer of 2019. However, in the short-term, the price is slightly overbought and it would not surprise me if the price trades somewhat lower before heading higher.