Easing geopolitical uncertainty could unwind gold price
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Last week’s close: Settled at 1560.1, up 5.8 on Friday and up 7.7 on the week
Fundamentals: Gold was buoyed by a weak Nonfarm Payroll report Friday and new sanctions announced by the White House on Iran ahead of the weekend. Despite the Nonfarm miss, Gold knee-jerked higher before working slightly lower. This exuded the geopolitical risk-premium that was built into the safe-haven through the week due to Middle East tensions, something that was slowly dissipating. However, the new sanctions kept a bid under the tape and sent Gold to fresh session highs. Coming out of the weekend though, a calmer geopolitical landscape and stronger risk-environment seen through equities has reinvigorated that late Thursday and early Friday weakness in the metal. Ultimately, we are prepared to see additional geopolitical risk-premium come out of Gold this week. Additionally, this week will be somewhat of an inflection point for the metal; although today’s economic calendar is light, data from around the world makes for a jam-packed week. Tomorrow, we look to U.S CPI.
Technicals: We remain unequivocally Bullish in Bias Gold in the longer-term, however, near-term we have expressed our uncertainty by reducing our Bias. We will look to that 1555.2-1558.4 mark to be our pivot to start the week and our momentum indicators falls right in here. Below here, the metal is vulnerable to waves of selling and given what has quickly become an overcrowded Net-Long Managed Money position, traders need to be cautious as this can exacerbate the downside. A close above 1566.2-1571.7 is again near-term bullish.
Resistance: 1566.2-1571.7***,1588.2-1595.7***, 1613.3**, 1626**
Support: 1538.3-1541**, 1529.8-1533.2***, 1510-1514.3***