The brief but sharp drop in equity markets caused safe-haven gold to bounce back this afternoon. Stocks dropped after Donald Trump’s oldest son released an email chain showing him discussing plans to hear damaging information on Hillary Clinton from the Russian government. Markets are worried that this may have influenced last year’s US presidential elections, and could put question marks over Trump’s presidency. If stocks start a meltdown now, then gold could back strongly.
The precious metal is finding additional support from a weaker dollar. The EUR/USD has broken above 1.14 resistance while the USD/JPY has started to ease back following its recent rally. The dollar is holding its own well against other currencies however, including GBP, NZD and CHF. But the euro and yen strength have caused the Dollar Index to turn lower.
The precious metal actually formed a doji candle right at $1207.50 support level yesterday. This level was the last resistance prior to the breakout in mid-March. If gold manages to rise and hold above the key short-term resistance area at $1215/18 then we could see the unwinding of the short positions and thus a short-squeeze rally. However if support at $1207.5 gives way on a daily closing basis then this would invalidate the bullish view.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.