Gold Rally Stalls Despite Heightened Global Tensions
Today’s Spotlight Market
Large speculators have continued to lighten their long positions in Gold with the most recent Commitment of Traders report showing a net-long position of 133,874 contracts as of August 5th. This was down by over 20,000 contracts for the week and demonstrates that Gold bulls are not comfortable holding long positions despite rising political tensions.
Between targeted U.S. airstrikes in Iraq and increased tensions over Russian involvement in Ukraine, one would think that investors would rush to Gold in a move towards ?safe haven? assets. However, gold prices have posted only modest gains of late as it appears that traders are focused on a stronger U.S. Dollar and improving economic conditions in the U.S. which could force to Federal Reserve to raise short-term rates. These last two factors are generally bearish for Gold which may be capping some of the flight to safety buying in the precious metals sector.?
Another possible explanation for Gold?s rather lackluster performance to end the week is that investors believe that the current economic sanctions against Russia will cause enough economic pain to force Russian President Vladimir Putin to look towards a political solution to address the Ukrainian instead of additional military intervention. A late day rally in U.S. equity indices may have also taken some of the shine off of Gold as funds appear to be moving back into equities after a nearly 5% price correction in the S&P500.?? ?
Technical Notes? -? View Today’s Chart
Looking at the daily continuation chart for Gold, we notice the market remaining in a multi-month consolidation pattern that started in late June. Since that time, Gold prices have made a series of higher lows and lower highs with neither bulls nor bears gaining the upper hand. The 14-day RSI has turned up, but remains relatively neutral with a current reading of 53.60. Near-term support is seen at 1279.70, with resistance found at 1346.80.?
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