Gold Loses Out As U.S. Stocks Hit New Highs
FOREX.com | Sep 15, 2017 17:47
Gold has had a quieter week, at least relative to crude oil and some major currencies, most notably the pound.
The precious metal surged to a new 2017 high last Friday as speculators anticipated there to be further missile launches from North Korea at the weekend. But there weren't any. As a result, safe haven bets were unwound throughout the week and gold fell back, along with Japanese yen and Swiss franc. North Korea then launched another missile test earlier this morning and this was one of its furthest-reaching yet. However, after an initial knee-jerk reaction, equities bounced back while gold and yen, in particular, weakened sharply.
Investors are evidently confident that North Korea’s actions will not lead to a war, because there seems to be a split between world powers. The US says China, North Korea’s closest ally, and Russia should do more to put pressure on Pyongyang. But China doesn’t appear too keen on getting involved while Russia has condemned "aggressive" US rhetoric. So, for the time being investors are largely ignoring geopolitical risks stemming from North Korea, for otherwise gold would be much higher and US indices far from being at record high levels.
With the dollar also showing some signs of support, the buck-denominated precious metal could weaken further in early parts of next week – that is unless North Korea tensions rise by a good few notches over the weekend again. So, gold could ease back towards that key $1290-$1300 support area, but then I would expect to see at least a bounce of some sort from that zone. However, any move below $1276, the last low prior to the latest rally, would be bearish. For now, though, the trend is still bullish.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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