We’ve finally seen the gold market break out of the recent trading range it’s been in for the past several months. Fundamentally, this is due to several different factors. The first and most obvious reason is a much stronger US dollar. There are no signs that the DXE is going to slow down. With four rate hikes now forecast at a coin flip, and decently strong economic data that seems to be coming out week after week. The North Korean peninsula is now in a very real and likely position for peace, something that was unheard of just a few weeks ago. It appears that maximum pressure through sanctions and military strength has brought the Kim regime to it’s knees. We are far from out of the woods on this, but something that could heat up again is the Iran nuclear program should the US choose to leave the deal. This appears more likely than not, but North Korea peace was far more unexpected and caught gold bulls off guard.
A technical look at gold does show that once again, the psychological and technically important level of 1300 has held for now. The bearish technical that shows longer term trouble for gold is the break beneath the 200-day moving average. There is still hope for remaining long, but we really need a hold of 1300 for the moment. If we hold this area the downside is minimal, and another test of the highs could be in order.
Gold Jun ’18 Daily Chart