Gold conquers 1200 handle, markets hedge Hard-Brexit risk
|Currently, Gold spot is trading at 1203.09, up +0.48% on the day, having posted a daily high at 1208.72 and low at 1196.86.
Risk-off accelerates over the weekend
Bloomberg reports, "The pound fell, equities slid and gold climbed on concern U.K. Prime Minister Theresa May is prepared to lead Britain out of the European Union’s single market and as the U.S. President-elect suggested other countries could break from the bloc."
Gold: Targets Further Upside Pressure On Price Extension
The report continues, "Caution dominated markets amid tough talk from May and Donald Trump about Europe’s economic and political institutions. British government officials trying to limit damage to the pound will speak to major banks in London before the U.K. leader sets out her vision for leaving the bloc in a speech on Tuesday, according to people familiar with the situation. Meanwhile, Trump predicted that Britain’s exit will be a success that will encourage others to do the same. He also branded NATO obsolete."
Valeria Bednarik, Chief Analyst at FXStreet, noted on the current risk environment pushing Gold prices higher, "As news released over the weekend, suggest Tuesday's Theresa May speech will be lean towards a "hard-Brexit." .The logic behind the speculative headlines says that the UK should leave to EU Single Market to secure free-trade deals with other countries across the world, and regain full control of the kingdom's borders. Although, it's mere speculation, it was enough to take the Pound sharply lower at the opening."
Gold Levels to consider
There is technical evidence to support the ongoing bullish momentum fueled via palpable risk events. Currently, price behavior has been in a good mood since Dec. 2016 last days. The short-term bullish ascendant channel keeps gold bugs adding long positions on every $15.00 pullback; how far can things get from here? It all depends, on the risk appetite and the commodity demand to hedge risk and currency exposure if that's the case more sterling losses may boost higher Gold prices. Nevertheless, Stochastic (5,3,3), which moves in the overbought territory indicates a slowdown and a pullback towards 1190.50/1180.30 range is not out of the table.
In terms of technical levels, upside relevant barriers are lined up at 1242.70 (100-SMA), and 1268.20 (200-SMA). While supports are aligned at 1185.80 (50-SMA), and below that at 1162.90 level (previous support Dec. 2016, later resistance, then support).
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