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This Is One level You Need To Watch In Gold - Saxo Bank
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(Kitco News) - While gold remains resilient in the face of last week’s solid employment report, the metal will remain sensitive to a renewed strength in the U.S. dollar says one analyst.
Tuesday, gold prices fell to a nearly-two week low as the U.S. dollar continues to push away from 13-month lows. However, Saxo Bank’s head of commodity strategy Ole Hansen, said that he still sees potential for gold as the market holds above key support levels amid renewed selling pressure.
“At this stage it would take a break below $1,230/oz (61.8% and 200 day moving average) to return sentiment to negative,” he said. “Overall, the market remains supported from investors looking for diversification and a hedge against risks such as a stock market correction, North Korea, Trump uncertainty…”
December gold futures last traded at $1,259.30 an ounce, down 0.43% on the day; at the same time, the U.S. Dollar Index last traded at 93.72, its highest level in more than a week.
While the U.S. dollar remains a headwind for gold, Hansen noted gold is seeing less pressure from bond markets. U.S. 10-year bond yields remain relatively subdued last trading at 2.28%, despite last week’s employment report, which showed that the U.S. economy created 209,000 jobs in July. Gold as a non-yield asset is sensitive to higher interest rates.
While Hansen said that he remains constructive on gold, he didn’t rule out further weakness in the near-term as investors are forced to take profits on U.S. dollar gains.
“In the short term, the rapid buildup in bullish bets has left gold exposed to some additional profit-taking. Support, however, is likely to emerge between $1,254/oz and $1,248/oz with the latter being the 38.2% retracement of the rally from the July low,” he said.
