08:58, 20 February

Moves to Nine Month High Around $1330 on Global Growth Concerns

In the last few weeks, gold has enjoyed solid support from the key level of $1300, allowing it to push higher to a nine month in the last few days. A couple of weeks ago gold enjoyed a solid push higher, breaking through resistance at $1300 and establishing a new trading range above this level. The significance of $1300 is for several weeks, gold met stiff resistance at this level, after enjoying a healthy surge higher throughout December. The $1300 level is likely to continue to play a role should gold decline a little and look to ease lower.

The move higher in December saw gold move to a then six month high just shy of $1300 after enjoying some solid support from the key $1240 level and the $1200 level before that.

For a couple of weeks before the push higher gold consolidated a little resting on support at $1240 after making a strong rally back towards this level, which had become significant when it offered reasonable resistance halting its climb a couple of months ago.  After struggling with the resistance level at the $1240 level for several weeks, it fell back to another key level of $1200 where it bounced off strongly.

The $1240 level provided some support in July and more recently pushed gold lower in October, so it is significant that it has now broken higher. The market will now be watching the $1300 level as this level was significant earlier last year.  For the most part through October and November last year gold had made a home in between two key levels of $1200 and $1240, and the markets were watching closely to see which way the next big move might be.

Ongoing concerns over the United States - China trade dispute and its potential impact on global growth have continued to support gold. The U.S. Federal Reserve kept interest rates steady and increasing concerns about global growth have also supported the safe-haven gold recently, while economic data continues to support the concerns over a broader slump in Europe. The International Monetary Fund (IMF) has recently warned governments to prepare for a possible economic storm as growth undershoots expectations. “The bottom-line is we see an economy that is growing more slowly than we had anticipated,” IMF managing director Christine Lagarde told the World Government Summit in Dubai. Lagarde cited what she called “four clouds” as the main factors undermining the global economy and warned that a “storm” might strike. The risks include “trade tensions and tariff escalations, financial tightening, uncertainty related to (the) Brexit outcome and spillover impact and an accelerated slowdown of the Chinese economy”, she said. Speaking about the ongoing trade wars, she said, “We have no idea how it is going to pan out and what we know is that it is already beginning to have an effect on trade, on confidence and on markets,” warning governments to avoid protectionism.