Gold extended gains on the first full trading day of 2020 to set new 3-month highs. On top of that, these gains came despite strength in both the dollar and stocks today!
These gains bode well for a short-term challenge of the 1557.06 peak from September and return further credence to the dominant uptrend. The yellow metal posted an 18.3% gain in 2019, with the bulk coming in Q3. Fresh highs for the rally early in the new year would offer further encouragement to the bulls.
Spot Gold Daily Chart
Central bank purchases of gold combined with their generally easier monetary policies were driving forces in 2019 and appear poised to continue into 2020. While tensions surrounding the U.S./China trade war has eased in recent weeks, it seems a final deal may still be months away.
The Phase One trade deal will reportedly be signed at the White House on January 15 with high-level Chinese government officials in attendance. President Trump tweeted on Tuesday that he would travel to Beijing "at a later date" to begin talks on Phase Two.
Similarly, while the UK election provided some clarity with regard to Brexit. There are still plenty of details to work out, any one of which might stoke fresh uncertainty and haven demand for precious metals.
The latest escalation of tensions in the Middle East – centered on Iran and its proxies – is likely to offer further support for gold.
Silver ended 2019 having retraced just over half of the corrective losses off the September high at 19.65. Silver notched a 15% gain in 2019, its best performance since 2010.
Spot Silver Daily Chart
I'd like to see some additional upside follow-through to bolster confidence in the preferred bullish scenario. I'm watching chart resistance at 18.22 and 18.33, as well as the 61.8% retracement level of the aforementioned decline at 18.45.
Platinum posted a 22% gain in 2019 and was able to approach the September high at 997.55 today. A breach of this level would clear the way for a move above $1000 for the first time since early-2018.
It was palladium however that was was the star of the precious metals show in 2019, posting a whopping 54% gain and setting new record highs with regularity. Arguably palladium remains pretty overextended, even with the recent corrective activity. Nonetheless, the fundamentals remain broadly supportive into 2020.
It is that recent correction that gives us our next objectives beyond the 1999/63/2000.00 level at 2051.42 (127.2% retracement) and 2117.30 (161.8% retracement).
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