The gold price broke through an important resistance level (its 200-day moving average) on Tuesday, crossing above the $1,260-per-ounce threshold for the first time since November. This represents a five-month high for the yellow metal, which added 0.65% on Tuesday to trade around $1,264/oz. Spot silver likewise pared its previous losses, advancing 0.75% to trade near $18.10/oz. Meanwhile, the Platinum Group Metals were sharply higher, as platinum gained 1% and palladium jumped 2% in early trading.
Markets awoke to a more risk-on environment to begin the week, as stocks posted early gains at the expense of safe havens like the precious metals. However, this narrative of optimism was quickly challenged, and equities reversed direction to close the session down from where they started. Precious metal traders wisely decided to “buy the dip,” helping keep gold and silver prices steady by the end of the session.
In terms of global trends, geopolitical conflicts and brewing international discord are sucking up a lot of the available oxygen in the news cycle. Between rising tensions on the Korean Peninsula to the airstrike against Bashar al-Assad’s regime in Syria authorized by President Trump, the temperature of these potential conflicts is undoubtedly rising. Whether or not these issues can be managed without further escalation will be a key to whether or not investors choose to park more of their money somewhere safe like gold. An undesirable confrontation with North Korea, or significantly greater U.S. involvement in Syria, would go a long way toward erasing the relative comity that markets have enjoyed through the first quarter of 2017.
The dollar was slightly weaker on Tuesday, losing 0.2% against its peers to trade at 100.8 on the DXY index. This continued a pullback from the dollar’s recent four-week high. Equities were mixed in Europe and Asia, while stock futures in the U.S. pointed sharply lower to begin Tuesday’s session in New York.
The oil market remains in a bullish mode, as both Brent crude and WTI crude traded near their one-month highs set last week. Both benchmarks were flat as action commenced on Tuesday. Treasurys saw some demand, pushing 10-year yields down to 2.32%.
One key indicator for gold prices from a technical perspective is the 200-day moving average (200-DMA). For the first time since right after the presidential election, spot gold is trading above this key running average (about $1,261/oz). Technical analysts usually see a break above the 200-DMA (if it occurs with sufficient trading volume) as a strong sign that the market is tilting toward the upside. Keep a close eye on whether or not gold can hold firm above this moving average.
The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.