Gold prices extend the ascent during the first trading day of the year, with the precious metal refreshing September highs earlier this week. The bullion reached the $1,525 handle on December 31 and preserves a bullish bias. The fact that the yellow metal managed to make a clear break above the $1,500 handle suggests that the market has generated a new bullish cycle which could extend should gold demand persist.

Interestingly, the bullion is rising despite the dollar shifted into a recovery mode after the recent weakness on market positioning during the last trading days of 2019. Against this backdrop, EURUSD has been correcting lower from the highs around 1.1240, and now struggles to hold above the 1.12 handle. GBPUSD has been retreating from local highs just below 1.33, down to 1.32. Meanwhile, USDJPY sees a recovery from two-week lows and has settled above the 200-daily moving average again. 

Besides, gold demand persists even as China and the United States continue to send positive signals to the global markets. As such, Trump reiterated that the two countries will sign a phase one deal later this month, probably on January 15. Against this backdrop, global stock markets extend the rally at the start of 2020. 

It looks like further buying in gold market is due to investor positioning at the beginning of the year which may bring new risks. While the global economy shows some signs of a recovery, there is still a possibility that failed attempts to revive a sustainable growth could lead to further easing by the major central banks, which is positive for the precious metal. 
From the technical point of view, gold prices need to hold above the $1,500 barrier which served as a strong resistance area before the recent breakthrough. Also, on the downside, an important support comes around the 100-daily moving average marginally below the $1,492 figure. As long as the prices stay above these two levels, the upbeat sentiment persists. Moreover, should global stocks switch into a corrective mode after the current rally, the yellow metal may receive the additional boost and target fresh highs at $1,540. 


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