Amid lackluster trading in other markets, one stood apart overnight. Gold, up two percent:
The fibo retracement is behind us and we also took out the October high:
The long term chart shows a nice double bottom in place too:
What’s going on, then? My guess it’s largely safe haven covering on the China slowdown and Ukraine. There was little new data in the US and the US dollar was down only a touch. There’s no point heading back into US dollars on risk if it’s going to result in a slowing taper so gold is benefiting.
US long bonds were still well bid with yields down one percent but they are not yet breaking down.
Despite the charts, I still can’t get too excited about this. Ukraine is still unlikely to get much worse. China is slowing, yes, and probably will some more, but US data should rebound out of its winter funk and even if there’s less hope of a strong recovery this year than a month or two ago, there should still be enough activity to continue tapering for now.
I’m still on the fence on this move.
