Gold surges through $1220 level, fresh weekly tops
| • A fresh wave of global risk-aversion trade benefits traditional safe-haven assets.
• Fresh USD selling pressure provided an additional boost and remains supportive.
• Technical buying above $1217 hurdle further accelerates the positive momentum.
Gold finally broke out of its European session consolidation phase and surged to fresh weekly tops, further beyond the $1220 level in the last hour.
A combination of supporting factors helped the precious metal to built on this week's goodish recovery move from over one-month lows and continue gaining positive traction for the fourth consecutive session.
A fresh wave of global risk-aversion trade, as depicted by a weaker tone around equity markets amid the latest UK political turmoil and resurfacing US-China trade tensions, was seen underpinning the precious metal's safe-haven demand.
The UK Brexit minister Dominic Raab, along with several other ministers and ministerial aides, resigned on Thursday in a wide protest against Prime Minister Theresa May's draft deal for leaving the European Union. Adding to this, letters calling for a no-confidence vote added to the UK political uncertainty and dented investors’ appetite for riskier assets.
Investors also kept a close eye on trade war developments between the world's two largest economies, especially after a US Trade Representative spokesperson denied a report, saying that another round of US tariffs on Chinese imports has been put on hold.
The global flight to safety was evident from declining US Treasury bond yields, which coupled with a subdued US Dollar price action, further weighed down by not so hawkish comments by FOMC members, provided an additional boost to the dollar-denominated commodity and remained supportive of the ongoing positive momentum.
Meanwhile, the latest leg of a sudden spike over the past hour or so could further be attributed to some technical buying on a sustained trade above 100-day SMA. It, however, remains to be seen if the up-move is backed by some genuine buying or is solely led by short-covering above the $1216-17 strong horizontal zone.
Technical levels to watch
Immediate resistance is now pegged near the $1226-27 region, above which the commodity is likely to aim towards challenging the $1233-34 heavy supply zone. On the flip side, the $1217-16 area now becomes immediate support and is closely followed by the $1214-13 region (100-DMA), which if broken might drag the metal back towards $1209 horizontal support.
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