Gold edges higher after having nearly touched December's low
The precious metal has been suffering since mid-June and closed in on December's low @ $1,236.55 earlier today. The low touched $1,237.95 but as the dollar falters on the day, gold is getting a much needed reprieve.
I've mentioned it before and I will again, gold's fate these days isn't tied to its attractiveness as a haven asset anymore. Since near the start of the year, it's been heavily tied to the dollar's movement instead despite all the talk on trade wars.
So, what's next for gold now? The answer to that will be to look at what the dollar is doing.
The dollar index has fallen below the 200-hour MA (blue line) and the momentum now sides with sellers, as support is next seen around the 94.50 level. A bit of near-term weakness appears to be on the cards but it seems that all the market is doing is just reversing yesterday's risk-off flows into the dollar more than anything else.
Will this mean further dollar weakness? It's too early to judge that but let the technical picture be your friend.
Further support in the dollar index is seen at 94.17 - the 26 June low - and that for me is one of the more defining support levels. Up until now, the dollar index has steadily moved higher after every retracement. But a break below the 26 June low @ 94.17 is telling of a bigger correction towards the region of 94.00 and below and that will see some reprieve for gold should that happen.
However, be wary of headline risks - especially those that can turn the risk-on, risk-off switch quickly. As ironic as it sounds, doom and gloom headlines tend to see gold suffer these days more than anything else.
