Short-term: Gold may still have upside

On Friday, COMEX2 monthly gold rose 20.7 US dollars an ounce to close at 1597.9 US dollars an ounce. On the domestic front, the Shanghai gold main contract of 1206 opened higher and lower today, rebounded in the afternoon session, and closed at the close. RMB328.39/g, which was RMB1.82/g higher than the previous day, both volume and open interest have increased.

In Europe, last week, Fitch Ratings lowered the outlook for France's AAA rating from stable to negative, and stated that the probability of losing AAA investment rating in France in the next two years is 50%. Fitch said that the downgrade of the French rating outlook to negative shows that the deteriorating economic and financial situation in the euro area has led to a significant increase in the likelihood of a rise in debt size.

However, Fitch also pointed out that France’s economy is rich and diverse, and its institutions at various levels are efficient. At the same time, the country has also taken measures to strengthen the credibility of fiscal consolidation, all of which have provided support for its AAA rating. Fitch believes that the sovereign debt crisis and other unfavorable factors in the euro zone will not have a significant impact on France’s fiscal position.

In the United States, the data released by the US Department of Labor on December 16 showed that since the lower energy cost offset a slight increase in the prices of food and other products, the US annual rate of consumer price index (CPI) growth was less than expected in November. The annual rate of the adjusted consumer price index rose by 3.4%, is expected to increase by 3.5%, and the previous value rose by 3.5%. However, due to the small difference in data expected, it did not have a significant impact on the market.

Currently, there are signs of stabilization in gold and an impact on US$1,600. In the short-term, there may still be room for turmoil in the market, as the market’s concerns about the European debt crisis have eased, although Fitch downgrades several banks and ranks France. Downgraded to negative, but did not cause further pressure on the euro, and the weekend news shows that the UK is also interested in returning to the EU's negotiation table. Therefore, the dollar is expected to remain high in the short-term fluctuations, and gold will once again hit the $1600 strike.