Gold Recovering
Gold prices are almost back to flat on the week after a strong rally yesterday. The move comes amidst a cross-asset recovery following heavy selling at the start of the week. Seismic moves in JPY had stolen the show at the start of the week, driving an outflow of capital from gold as traders rushed back into JPY for safety, buoyed by tighter BOJ policy. An accompanying shift in traders’ USD outlook has also played a factor this week. On the back of a heavy slowdown in US jobs growth last month, and the unemployment rate rising to a 3-year high, traders are now expecting a faster paced easing path from the Fed this year. Ultimately, such conditions should prove favourable for gold, particularly if accompanied by further USD weakness.
Near-Term Outlook
The near-term picture for gold looks likely to remain choppy as traders adjust to the new dynamic between USD and JPY which has seen a huge unwinding of the long-held carry trade. With the potential for further USDJPY downside, gold prices could still struggle to gain higher ground near-term as capital moved into JPY. However, looking ahead to the coming quarter, as the carry trade unwind finds equilibrium and Fed easing begins, gold prices should start to trend higher again.
Technical Views
Gold
For now, gold prices remain stalled around the 2,364.93 – 2,427.54 levels in the upper part of the bull channel. While support holds, focus is on an eventual break higher. Should we slip back, however, focus turns to 2,275. 43 as deeper support to monitor.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.