Gold jumps $10 as buy resistance breaks following geopolitical tension and dollar weakness – $1,300 predicted
Chart showing the gold price breaking trendline. Source: @WangTaoReuters
The gold price has jumped around $10/oz overnight, as other factors augment the continuing geopolitical concerns around Syria and North Korea.
Reuters reported a rise of 0.2% in spot gold to $1,287.98 per oz, making it the new high since Nov. 10th. It was at $1,285.22 at 07:13 GMT. They also reported gold futures increasing by 0.7% to $1,286.40, suggesting the market expects the bull run to continue.
The US dollar took a hit after Donald Trump reiterated his concerns that the world’s reserve currency was “too strong”, and that the Federal Reserve should keep interest rates low. The dollar index, which measures the greenback against a basket of currencies, fell by 0.6 to 100.050, according to Marketwatch.
Trump’s comments put him at odds with the Fed’s chairman Janet Yellen, who has previously suggested numerous incremental hikes throughout the year. The comments contrast to Trump’s view on Fed policy during his campaign trail, where he claimed Yellen was playing politics and keeping interest rates low to help President Obama.
A third reason for gold’s very bullish week is the breaking through of a key “resistance level”—key psychological thresholds which put gold on certain trajectories.
Once the gold price has gone past a certain point it can attract more investors, pushing the price up even further. Previously, we have reported price gains, but the resistance level was a key factor in keeping a lid on the gold price at the high end of the $1,200s.
CityAM quoted Hussein Sayed, FXTM Chief Market Strategist: “gold is approaching the key $1,300. The precious metal is benefiting from three main factors at the moment — the dollar’s weakness, ongoing geopolitical tensions, and breaking above key resistant points on the charts. I think that investors don’t want to dump equities aggressively as we enter the earning season. Instead, they are holding equities and adding some safe havens on the side, which is likely to keep gold supported”.
Marketwatch quoted Reuters technical analyst Wang Tao as saying spot gold is expected to climb to $1,303 after breaking through the resistance at $1,282. Prices also broke the 200-day moving average of $1,260.4.
In mining news the consistent bullish sentiment is having an effect on mining shares. CityAM reported that Randgold Resources shares were trading 1.14 per cent higher at 7,510p while Fresnillo was trading 1.54 per cent up at 1,640.9p.
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