Gold's Next Challenge Is Upon It
Axi | May 02, 2017 12:13
Originally published by AxiTrader
After failing recently at trendline resistance - which stretches both from the 2016 high around $1375/80 and the 2011 high north of $1900 an ounce - gold has drifted back to $1255 this morning.
That's just a couple of dollars north of the important 200-day moving average many traders use as an indicator of bull and bear outlooks which comes in today at $1252.78.
Gold's falls come in the wake of continued price rises on US stock markets and the most remarkable thawing in relations between the US and North Korea which suggests a possible easing in geopolitical tensions on the Korean peninsula.
In an interview with Bloomberg the president said (my emphasis), "If it would be appropriate for me to meet with him, I would absolutely, I would be honoured to do it. If it’s under the, again, under the right circumstances. But I would do that."
Naturally one comment won't ease tensions. But if this is a clash of personalities this is a strong signal to Pyongyang that there is a path to save face and do a deal.
That's going to be important in any back-of-house negotiations. And that impacts gold because it's also important for deescalating geopolitical tensions which undermines some of the key drivers of the recent gold rally.
Getting back to the chart, if the 200 day moving average is important. The 38.2% level of the MArch/April rally at $1256.94 has given way. So the next support is the 50% level at $1245 and then the uptrend line from last December's lows which comes in at $1242 is the key to it all.
I always respect these levels and lines - unless or until they break - but if this level gives way a move back to $1220, perhaps $1198 is on the cards.
Have a great day's trading.
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