Gold prices surge to fresh weekly highs around the 127% fibo

Gold prices rallied in the open today and reached a high of $1,555.33 from a low of $1,526.74. The price is +1.24% at the time of writing. Gold prices were gunning for the 127% Fibo and the bulls have pushed the precious metal towards it with commitments likely to come in at the 23.6% Fibo and 38.2% Fibo of the opening rally. 

The move comes following the pressure on global equities with US stocks ending in a sea of red on Friday due to the trade war escalation with Trump ordering American companies to start looking for “an alternative to China,” in retaliation to the Chinese tariff announcements.  The Dow was off more than 700 points at its session low marking the first downside target for the week ahead but ended the session on Friday down 623.34 points, or 2.4%, at 25,628.90. 

Fed officials calling for deeper cuts

Meanwhile, we have sees diverse views expressed by other Fed officials on the need for further US rate cuts. "Regional Fed Presidents George, Harker, and Rosengren have voiced their resistance to lower interest rates, noting solid US data, financial stability risks, and the need for a long-term view. Meanwhile, Kaplan said he has an open mind about further action, and Bullard advocated for a 50bp cut at the upcoming meeting as an insurance cut. Market pricing is on the side of the dovish officials, with a full cut priced in for September and 100bp of Fed cuts priced in by mid-2020," analysts at ANZ Bank explained, which will also weigh on the price of the dollar and favour gold prices. 

Gold levels

The bulls penetrated above the 1535s and fell just a few bucks short of the 127.2% Fibo target which is located around 1,560, guarding the Oct 2012 highs at 1795. On the downside, the 23.6% Fibo and 38.2% Fibo of the opening rally are located at 1540 and 1531. However, should there be some fundamental switch up, bears can target a 23.6% retracement of the prior rally to 1472 ahead of a 50% mean reversion to 1401.