Idea of the Day: Triple top for gold
City Index August 14, 2017 11:19 AM
The gold price is easing off today as risk sentiment makes a comeback. The easing of tensions between North Korea and the US over the weekend has hurt safe havens like gold.
What: The gold price is easing off today as risk sentiment makes a comeback. The easing of tensions between North Korea and the US over the weekend has hurt safe havens like gold, and if we continue to see tensions ease then there may be more weakness to come for the yellow metal.
Gold may also struggle to find a bid as we lead up to the Jackson Hole central bankers’ conference, which takes place from 24-26TH August. If we see the ECB’s Mario Draghi tout the prospect of the end of Eurozone QE then this could make it even harder for gold to rally in the second half of August. Technical factors are also working against gold, as key resistance at $1,300 is thwarting the bulls yet again, this is starting to look like a triple top.
How: When you get a triple top it suggests that buying interest is becoming exhausted, which could mean that gold is unlikely to break above the $1,300 level for some time. If we continue to see risk sentiment return then we may see back to the pre-North Korea jitters level at around $1,250, $30 lower than where we are now. This is also the 50-day moving average, which may act as decent support in the short term.
Source: City Index and Bloomberg
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