Gold Teetering Above Support
Today’s Spotlight Market
Gold futures got a brief reprieve from the recent selling pressure after a report showed a decrease in US home sales.? This triggered concerns that the economy still has more fundamental issues outside of just a bad winter.? While economic indicators may be softer, the ongoing tension in Ukraine may continue to underpin the Gold market.? Ukrainian forces resumed operations to remove pro-Russian militants from eastern cities. The US is also sending 600 troops to Poland and the Baltic states to participate in military exercises, which will do little to lessen tension in the region.? Technically, Gold is nearing a technical support level, which risks triggering heavier selling pressure if support is violated.
Fundamentals
Fundamentally, it appears that some of the liquidation in the precious metals market could be attributed to traders shifting assets to equities.? US economic indicators have done little to instill confidence in traders that the economy is heading in the right direction.? Chinese PMI showed four consecutive months of contraction, which is cause for concern.? In addition to tension in Ukraine, recent statements from the Federal Reserve suggest that the bank will continue to keep the liquidity floodgates open.? Holdings exchange traded funds rose by 1.8 metric tons yesterday.? However, holdings did recently fall to the lowest level in three and a half years.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Gold chart forming a triangle pattern on the daily chart.? The lower side of the triangle pattern coincides with support.? If prices break through support near the 1278.00 level, price could test the 1190 level.? Near-term support also coincides with the 100 day moving average, suggesting a downside breakout could be seen as especially bearish.
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