Originally published by AxiTrader
Gold had a stellar run for the best part of two months between early July and early September rising from around $1205 USD an ounce to a peak around $1,357/58 on the 8th of September.
A number of factors drove that rally including US dollar weakness, some disquiet with the stalled US - and global - equity rally, a big drop in US bond rates, and of course the escalation in tensions over the Korean Peninsula.
All of which caused risk appetite to fall and gold to catch a very strong bid tone and map out a strong uptrend.
But, as it became clear the US is holding firm against blatant provocation from the DPRK's tests and missile firing in search of a global consensus markets - and traders - became less worried about a military conflict on the peninsula.
That in turn - and along with a renewed source of positivity toward the ambitions of the Trump Administration toward tax cuts and reform - has seen investor risk appetite rise again. The S&P 500 has crossed and closed at 2,500 for the first time ever. US 10-year bonds, which just two week's ago looked set to trade under 2% are back above 2.20% with their first weekly close at that level in a month Friday.
So gold has come under a little pressure.
Put simply, like the yen, and to a lesser extent the Swiss franc and other safe havens like German bonds, gold's portfolio protection properties are not as sought as they were if traders are more positive.
So gold is trading at $1,317 this morning as it approaches important technical support - on two fronts.
$1,310 is the bottom of the uptrend channel while $1,299 - which for me is the target and very strong, not to mention important - support. I say that because it is both an area of previous tops but also the - garden variety - 38.2% retracement level.
Rhetorically I want to own gold as we get down toward those levels. But systematically I'm still waiting for a signal.
Have a great day's trading.