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The spot gold price is quoted at $1725 ahead of the weekend, with analysts and technical forecaster Richard Perry of Hantec Markets lays out the key levels to consider for traders now the market is back at a crossroads.
The outlook for gold remains on a knife edge.
Following the rebound from $1693 on Wednesday the market has rallied back into the resistance around the $1722 pivot and a near term downtrend.
Although the market closed positively yesterday, the candle hit the downtrend resistance and closed just under the pivot.
Trading cautiously this morning, there is a real sense that this is a near term crossroads now.
Picking up off a medium term uptrend on Wednesday and hitting the near term downtrend today, this Is a move that could be close to the bulls regaining control.
However, the rebound has stalled today and needs to breach the downtrend (around $1724 today) but with a move above $1735 resistance at least needed to really suggest positive momentum is building again.
For now, this is a waiting game.
President Trump could easily announce something today that massively shakes the positive risk appetite and pulls strong positive momentum into gold once more.
We remain medium term buyers of gold and see that this near term correction will be an opportunity. The corrective set up needs to be broken for that to take hold. Support at $1693 is growing in importance now and the support of a 7 week uptrend comes in at $1699 today.
Will Trump Stoke Demand for Gold?
For the past few days, markets have been building with anticipation of an impending escalation of tensions between the US and China.
Whilst equity markets have been positive with focus on COVID-19 vaccines and economy re-openings, looking large overhead has been the US response to China over its treatment of Hong Kong.
Tension is being cranked up today as President Trump is set to hold a press conference to announce the US response to China imposing its will over Hong Kong with a security bill.
If he announces the intention for punitive sanctions on China and the status of Hong Kong, then it could really hit risk appetite. Market sentiment has taken a hit overnight in anticipation.
Equities fell back into the close on Wall Street and futures are pointing lower this morning.
Safe haven asset plays are benefitting, with US Treasury yields lower, the Japanese yen outperforming major currencies, and a rebound continuing on gold. What is interesting in all this is that the dollar is suffering amidst this move. Historically, where US/China tensions flare up, the dollar has been strong.
For now, this does not seem to be the case. We see that the risk rally that had held such positive momentum earlier in the week is hitting the buffers today and markets are on a knife edge ahead of Trump’s press conference.
Furthermore, overnight Japanese data for April on retail sales and industrial production coming in worse than expected has played into a more cautious outlook across major markets, although May’s Japanese consumer confidence did come in slightly ahead of forecast.