Gold still in favor as risk sentiment moves positive

Published date: 28/08/2019
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As the market remains quiet gold holds at elevated levels.

Since the breakout of the triangle formation on the weekly chart, there has been a massive surge in prices.

One of the main drivers has been the trade war between China and the US. Suddenly after the fireworks on Friday, Trump has seemed to cool his rhetoric. Although both sides are still going to add tariffs the talks are still set to go ahead next month. 

Elsewhere, central banks are still set to be on a gold buying spree after hoarding dollars has set to be oversubscribed. The Fed has stubbornly held its stance at keeping monetary policy stable despite immense pressure from the President who seems to be having a pop at Fed Chair Powell on twitter on a daily basis now. 

Looking at the weekly chart above, price is at a critical level and is now waiting for a catalyst to boil over. If the talks fail next month and stock markets capitulate we could expect a move higher. That is not the only risk event as the FOMC rate decision will also be upon us. The futures markets are pricing in a cut, so if the Fed disappoints it could be another reason for the safe haven to surge. 

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