'Significant Surprise' Needed For Gold To Make A Move - Analyst
(Kitco News) - Gold is stuck in its safe $1,300-1,360 trading range and frustrated traders need to wait for a surprise that’s powerful enough to nudge gold in either direction, according to one analyst. And it’s not North Korea or Iran.
“Clearly, it’s going to take a significant surprise event to knock it out of this range,” Colin Cieszynski, chief market strategist at SIA Wealth Management, told MarketWatch on Thursday.
So far, geopolitical risks, including tensions surrounding North Korea and Iran were not enough to trigger a sustained rally.
Political risk changes related to Iran and North Korea haven’t been able to do it yet, and the recent rally in the U.S. dollar has been unable to do so either,” Cieszynski said. “ Likewise, the U.S. Treasury yield hasn’t been able to get away from 3.00% in either direction.”
One of the drivers that could finally move gold is a correction in the stock market, Cieszynski added.
“Just as stock markets have moved into a range that could last for a year, gold could spend much of the year in this range,” Cieszynski warned. “When it does break, it could be accompanied by other moves like a break in stock markets, bonds, the U.S. dollar or interest rates.”
Things are heating up in the Middle East, thanks to the U.S. withdrawal from the Iran nuclear dealhttps://t.co/Wk3JIUlHsC@DanielaCambone @DrPippaM #Trump #POTUS #Iran #NuclearDeal pic.twitter.com/UmZsEkPYfF— Kitco NEWS (@KitcoNewsNOW) May 10, 2018
In February, the market saw a correction in equities, but gold failed to rally as much as was expected by many analysts at the time.
On Thursday, gold’s price action was tamed, with the yellow metal making modest gains and touching the session high of $1,322.
“[Gold saw some] upside support from a bit of safe-haven demand, a lower U.S. dollar index, a tame U.S. inflation report, and some short covering in the futures markets,” Kitco senior technical analyst Jim Wyckoff said.
The level to watch is a close below a major psychological support at $1,300.00, which could trigger a selloff, noted Wyckoff, adding that he does not see that happening in the short-term.
“Right now it appears that strong support level will hold. A bullish weekly high close on Friday would give the bulls upside momentum to suggest a near-term market bottom is in place,” he wrote in his PM Roundup. “First resistance is seen at today’s high of $1,323.40 and then at $1,330.00. First support is seen at today’s low of $1,310.60 and then at the May low of $1,302.30.