by Chris Becker
With chaos comes opportunity and with the wheels falling off the Trump administration and central banks hell-bent on getting back to “normalcy”, not just the gold bugs are calling for a return to the shiny metal.
Beyond the macro risks are the technical factors that will indicate a breakout in gold. A potential level to watch is $1300USD per ounce:
Even the novice technical analyst can see that a thrice hit upside target since the start of the year has some anchoring reasons behind it.
UBS agree its both psychologically important and a positioning factor. More from Forexlive:
The impact of geopolitical risks on gold prices is difficult to anticipate and generally tends to be quite volatile and headline-driven.
- Nevertheless, that the downside in gold has been relatively contained despite fluctuations in risk appetite over the past few weeks suggests that there’s an underlying appetite to hold gold as a safe haven and a hedge against potential tail risks.
- positioning in gold has increased considerably as of 15 August
- Net longs added nearly 4moz, bringing speculative positions to 20.04moz. Gains were mainly due to gross longs extending positons – the relatively sizeable increase in the past week presents some near-term risks and somehow raises the threshold for a convincing topside break.
- Net long positions in silver, platinum and palladium similarly gained sizeably, but unlike gold these gains were mostly driven by short-covering.
Let’s take a longer look using the weekly chart:
We can see that since lat 2015, gold recovered from its bear market and tried to push through $1300 back in 2016, had a correction below $1200 and has now been ranging since the start of the year.
For even longer context, consider the monthly chart:
What presaged this was a large bear market where gold dropped from nearly $2000USD per ounce to just over $1000 in a classic falling wedge pattern. This provides the upside target – right back to $1800 on any weekly breakout above $1300.
For Australian holders that level matters even more, because priced in AUD, gold has never been in a bear market, oscillating between $1300 and $1700AUD per ounce since 2012:
Gold looks to be an excellent short and medium term opportunity to say the least!