09:44, 03 April

Consolidates Below Key $1300 Level as Markets Assess Global Concerns

In the last week or so gold has fallen sharply from comfortably above the current key $1300 level before consolidating and trading in a narrow range in the last few days. Before this decline, gold was steadily and slowly moving higher rallying back above the $1300 level.
Several weeks ago gold was cruising along pushing to new nine month highs on the back of solid support from the key $1300 level, before crashing lower pushing through any support at the $1300 level and moving to its lowest levels in six weeks.

The fall in the last week threatened to push lower but was met with some support around $1290. In late January 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 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. The $1240 level may play a role again should gold continue to decline as it is the next obvious support level. 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 few months ago. The market will now be watching the $1300 level as this level was significant earlier last year and has been again throughout the early stages of this year.

Ongoing concerns over the global economy are keeping gold well supported presently, however some recent positive data has seen it slump a little as everyone seems to be assessing the concerns for the global economy. Equities markets have moved well in the last week or so on a surprise rebound in China’s manufacturing data and better-than-expected U.S. numbers, which is convincing many market participants that there is little to need to be carrying the safe haven of gold in their portfolios at the moment. This has also seen the US dollar move to a three-week high against a basket of major currencies. Meanwhile, the Managing Director of the International Monetary Fund (IMF) Christine Lagarde said that while rising trade tensions and tighter financial conditions has seen global growth lose momentum, some pauses in rate rises this year will help boost activity in the second half of 2019. Markets are also monitoring the ongoing United States – China trade negotiations, which are set to resume later this week in Washington, DC with a Chinese delegation led by Vice Premier Liu He.