Gold: Supported above the confluence of S1 and the 21.6% Fibo
- Spot gold remains supported above the confluence of S1 and the 21.6% Fibo retracement of the latest rally.
- Currently, gold is consolidating at $1,221/oz, slightly above the pivot and will continue to take cues from the stock markets and investor's risk appetite.
There were a recent combination short covering and a flight to safety that lead to gold's rapid increase in price with the precious metal climbing through the descending channel's resistance to set a fresh high of $1,226/oz up from $1,180 recent double bottom lows.
However, US equity markets set a firmer tone on Friday with respect to investor risk appetite which leaves gold bulls exposed to the risk of a deeper correction should market's continue to recover - Gold had already retreated back to $1,216 which has been marked out by the bears in the last two full day's of trade since its advance.
Geopolitics just rose to a new risk level
Eyes will stay focussed on US rates, the US dollar and stock markets with investor sentiment on shaky grounds considering the heightened tensions with respect to global trade relations and geopolitical risks. Just as it appears relations between Washington and Turkey are on the mend, it seems Trump now shifts his attention over to the Saudis following the apparent murder and dismemberment of US-based journalist Khashoggi by the state - Analysts at Rabobank explained that Trump has talked about “severe punishment” and noted publicly that without US help the Saudi regime would not last two weeks - "However, Saudi Prince Mohammad Bin Salman (MBS), who is widely regarded as a dangerous double-or-quits gambler in terms of foreign policy, is not backing down."
Gold levels
On fresh buying, the next Fibo extension is located at $1,235.02 as the161.8% Fib. On the flip side, the 50% Fibo of the 8th Oct bid falls in at $1,204. On route, the 38.2% Fibo is located around $1,209. To the upside, $1,320 and the $1,236 are key objectives through the rising trendline support through $1,281, 28. May low.
Author
Ross J Burland
FXStreet
Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.
