Gold gains on mounting North Korea tensions
|Gold and other safe haven assets including the Japanese yen and the Swiss franc maintained the gains as investors flocked to the safe haven assets. Rising tensions between the United States and North Korea have kept the investor risk appetite in check. After North Korea had dismissed the warnings from Trump, the president said that his previous statement might not have been enough.
The US equity markets understandably fell with the Dow Jones losing 204.69 points while the CBOE volatility index spiked, signaling caution in the equity markets.
On the economic front, the UK's manufacturing and industrial data was a mixed bag. Most of the gains came from the oil and gas industry in an otherwise flat print on manufacturing.
Looking ahead, the US consumer price index data will be coming out today. Forecasts point to an uptick in inflation, which could help to boost the sentiment in the U.S. dollar.
EURUSD intraday analysis
EURUSD (1.1773): The EURUSD continued to stay firmly supported above the short-term support level at 1.1730. Price action has managed to bounce off this level, and the failure to break down below this support will now see a retracement back to 1.1800. Establishing resistance here will be critical for the further direction in the currency pair. Above 1.1800, further gains in EURUSD could signal a short-term upside in prices. The next level of interest to the upside will be likely at 1.1900. To the downside, if we see a reversal at 1.1800, EURUSD could remain range bound within the levels, but the bias could shift to the downside. Eventually, if EURUSD breaks below 1.1730, then we can expect to see a decline to 1.1635 support.
GBPUSD intra-day analysis
GBPUSD (1.2995): The GBPUSD currency pair continues to trade below the support level at 1.3025. However, price action has remained limited so far. On the 4-hour chart, we can anticipate another test back to 1.3025. It is essential that GBPUSD will post a reversal here establishing resistance. This will pave the way for a decline towards 1.2818 - 1.2800. To the upside, a breakout above 1.3025 could signal further gains that could push GBPUSD towards 1.3177. We expect the declines to come through sometime next week when the UK's inflation and wage data will be published.
XAUUSD intraday analysis
XAUUSD (11286.42): Gold prices touched a two-month high yesterday, but price action is likely to show some short term exhaution to the rally. The immediate support is seen at 1270 levels which could be tested on a downside break. To the upside, gold prices remain range bound in the longer term horizon. The previously established resistance level at 1292.40 is likely to be tested once again. Given the strong pace of gains, however, we can expect gold prices to test the level before reversing off the resistance level. The newly established range with support at 1270 will be key for the short-term price action, which we suspect will stay sideways for the moment.
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