Gold sits at three-month highs near $1525 on New Year’s Eve

• Gold set to book the best year in almost a decade.
• US dollar weakness amid trade deal hopes boosts gold.  
• XAU bulls cheer central bank gold buying, risk-hedging lend support.

Having reached the highest level since end-September at $1525.10 last hour, Gold (XAU/USD) has entered a phase of consolidation, as the bulls take a breather and gather pace for the next push higher.

Persisting US-China trade deal optimism curbs the demand for the safe-haven the US dollar across its main competitors, in turn making the USD-denominated yellow metal more attractive for foreign buyers.

Recently, White House trade adviser Peter Navarro noted that a phase one deal was likely to be signed next week. Meanwhile, markets cheer the latest upbeat comments from US President Trump and Treasury Secretary Mnuchin on the likely trade deal.

Moreover, increased year-end buying in gold amid hedging against the potential risks in the next year also propels the bullion northwards. In evidence of rising investors’ confidence in gold, speculators raised their bullish positions in COMEX gold contracts in the week to Dec. 24.

Further, the latest tweet by Jeroen Blokland, portfolio manager for the Robeco Multi-Asset funds, citing that central banks have purchased 4,538 tonnes of gold since 2008 and have recovered more than half the amount they sold between 1965 and 2008, collaborates to the bullish sentiment seen around the precious metal.

Heading into the yearly close, gold prices could extend the upside and witness volatile moves amid thin trading conditions. It's worth noting that the yellow metal is on track to book about 19% yearly gain in 2019, making it the best year since 2010.

Gold Technical levels to consider