Gold Fades on Friday

Gold’s Syrian induced spike on Friday looks good on paper but a closer investigation reveals otherwise.

Although we traded in a straight line to 1270 an ounce, we closed on Friday at 1255. This means that yet again, gold has unceremoniously failed at the 200-day moving average at 1258.50. A resurgent U.S. Dollar post-Friday’s data won’t have helped either, with New York ignoring the Non-Farm Payrolls number and concentrating on the low unemployment read.

Gold is running on vapours at these levels on a technical charting basis, with resistance at 1258.50 and Friday’s high at 1270. Support lies initially at 1250, with the critical level being 1240. A breakthrough here will almost certainly prompt a culling of long positioning.

It is clear that gold is a much lower beta to the Middle East event and North Korean posturing than the oil markets. We will thus need continuing infusions of geopolitical uncertainty to hold it up here for now, or a suddenly much lower dollar.

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