x
Breaking News
0

Gold Rallies In The Face Of Increased Geopolitical Risk

By Blackwell Global (Steven Knight)CommoditiesAug 09, 2017 06:30
ca.investing.com/analysis/gold-rallies-in-the-face-of-increased-geopolitical-risk-200195977
Gold Rallies In The Face Of Increased Geopolitical Risk
By Blackwell Global (Steven Knight)   |  Aug 09, 2017 06:30
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Key Points:

  • U.S. RedBook signals slipping Retail Sales data.
  • RSI Oscillator remains on an upward trajectory in neutral territory.
  • The U.S. Core CPI result is likely to determine the near term fundamental trend.

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.

XAU/USD Daily Chart
XAU/USD Daily Chart

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.

Gold Rallies In The Face Of Increased Geopolitical Risk
 

Related Articles

Gold Rallies In The Face Of Increased Geopolitical Risk

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

 
Are you sure you want to delete this chart?
 
Write your thoughts here
 
Replace the attached chart with a new chart ?
Post
Post also to:
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
 
Replace the attached chart with a new chart ?
Post 1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: 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) and Forex 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 or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email