Blackwell Global | Aug 09, 2017 06:30
Gold prices firmed overnight to close around the $1260.75 an ounce mark as the precious metal reacted to a range of increased risk emanating from renewed tension on the Korean Peninsula. However, there is more than just the ongoing North Korean situation fuelling the drive with the latest U.S. Red Book figures showing Retail Sales slipping fractionally to 2.6% y/y. Subsequently, it’s prudent to take a cursory review of the technical and fundamental outlook for the precious metal.
From the technical perspective, Gold has continued to trade within a relatively narrow range with yesterday’s session bringing further consolidation with the top at $1274, from early August, dominating proceedings. In addition, the RSI Oscillator is still exhibiting a longer term bullish trend, on the daily timeframe, whilst it presently remains within neutral territory. At this stage, Gold’s near term support is at $1255, which also represents the Ichimoku cloud bottom, whilst the upside presents a hurdle at $1275 of which a break above could see the metal trading around the $1295 mark. Subsequently, declines back towards the cloud bottom represent key buying areas of which the market is cognizant of.
Fundamentally, Gold has experienced a small pullback following Friday’s stronger U.S. Jobs Numbers and renewed capital flows into the greenback. However, at this stage everything is likely to remain relatively quiet ahead of the inflation data which is due out late in the week. The broad market consensus is for Core CPI to rise to 0.2% m/m (0.1% prev) but expect some variability given the recent slip in retail sales as well as instability within oil markets. Subsequently, the risks are largely on the downside for the result which would send Gold rallying higher to challenge the $1275 resistance point.
Additionally, as perverse as it armed conflict is, Gold typically benefits from its status as a safe haven asset in times of political and economic turmoil. If indeed the present crisis with North Korea turns to armed conflict then Gold will rise strongly as capital clamours for a safe haven amongst the carnage that is sure to come. Subsequently, it would be worthwhile keeping abreast of the crisis because, if/when action occurs, Gold prices will move rapidly.
Ultimately, the forward risks for Gold are weighted to the upside in both the technical and fundamental cases. A likely scenario for the metal would be the release of a less than stellar U.S. Core CPI result which results in some sharp gains for the metal above the $1275 an ounce mark. If this was to occur we could see a renewed bullish leg for the precious metal in the weeks ahead.
Written By: Blackwell Global
Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors. Trading or investing in cryptocurrencies carries with it potential risks. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Cryptocurrencies are not suitable for all investors. Before deciding to trade foreign exchange or any other financial instrument or cryptocurrencies you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures), Forex and cryptocurrencies prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn’t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.