Gold Rally Accelerating
Gold prices continue their impressive run with the futures markets spending its fifth consecutive day at new record highs. A weaker US Dollar and heightened investor uncertainty is fuelling the current buying spree with the rally looking well supported currently. A weaker JOLTS job openings number yesterday sparked fresh selling in the Dollar, which had already come under pressure amidst a reversal in sentiment linked to Trump’s trade war.
Trade Tensions
Expectations that Trump will strike a deal with China to avoid an escalation of the trade war, as well as Mexico and Canada agreeing to meet Trump’s border requests, saw initial USD strength quickly reversing. Traders are now looking ahead to further incoming jobs data today and Friday with the risk that USD sells off further on any fresh data weakness, allowing gold to keep pushing higher.
Investor Uncertainty
Investor uncertainty is also a key part of this rally. As Trump pushes ahead with more executive orders and more policy adjustments, traders are becoming more unsettled. Recent comments around plans to take over Gaza ha particularly spooked investors with fears of a fresh US conflict in the Middle East if Trump seriously pursued these plans. Additionally, the trade stand-off with China is still a risk and could still escalate further, while the ongoing conflict between Russia and Ukraine remains a key threat also. Against this backdrop, safe haven demand for gold looks likely to continue near-term which, coupled with a weaker Dollar, means the current rally is likely to continue and find good demand on any pullback.
Technical Views
Gold
The rally in gold has seen the market breaking above the prior highs at 2789.40, now testing above the 1.25% fib extension at 2,859.15. While above here, and with momentum studies bullish, the 1.61% fib extension at 2,949.88 is the next bull objective. 2,789.40 remains key support, with the bull view intact while that level holds.
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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.