Gold prices down, under pressure

Gold prices fell in early trading on Monday as markets remained quiet ahead of the holiday. This week is expected to be a quiet one across all markets as the Christmas holiday falls on Wednesday.

However, the precious metal is under some pressure as the USD index increases sharply and US Treasury yields increase slightly.

Major overseas markets today saw the US dollar index rise sharply, approaching a two-year high reached last week. Nymex crude oil futures fell, trading around $68.75 a barrel. The yield on the 10-year US Treasury note is currently at 4.562%.

According to Kitco, gold prices remained above $2,600/ounce but showed no signs of a sharp increase due to consumer confidence in the US falling more than expected.

The Conference Board reported Monday that its consumer confidence index fell to 104.7, down from a revised 112.8 in November. The reading was weaker than expected, with economists predicting the index would be largely unchanged.

“Expectations that consumer confidence would continue to recover were not realized in December, when the index fell back to its two-year average,” said Dana Peterson, chief economist at the Conference Board.

Some economists note that the data is all the more worrying as it comes during the crucial holiday shopping season. Typically, consumers spend more when they feel optimistic about the economy.

The report showed that the overall index fell sharply, driven largely by a sharp decline in consumers' expectations for the future. The current situation index, which measures consumers' assessment of current business and labor market conditions, rose to 145.2, up from November's 140.9. However, the expectations index, which reflects consumers' short-term outlook for income, business and labor conditions, fell to 81.1, down from 92.3.

“Consumer confidence in both current and future conditions declined, but the biggest decline came in expectations for the future. Consumers remained more positive about the current labor market, consistent with recent employment and unemployment data, but were less positive about business conditions.

Compared to the previous month, consumers were significantly less optimistic about their business and income prospects in December. In addition, pessimism about future employment opportunities has also returned," Peterson said in the report.

The report also showed consumers remain concerned about inflation as 12-month inflation expectations rose to 5.0%, up from the 4.9% reported in November.

Jim Wyckoff, senior analyst at Kitco, said that in the short term, both buyers and sellers in the gold market have a relatively balanced advantage. The next price target for buyers is to close above the strong resistance level of $2,700/ounce. On the contrary, the target for sellers is to push prices below the threshold of $2,565/ounce.