Wednesday May 17, 2017 10:32
Gold prices are pushing toward key resistance as strong risk-off sentiment surges through financial markets Wednesday.
According to analysts, growing turmoil in the White House is creating some safe-haven demand for gold and silver. The latest drama is the result of news that President Donald Trump asked then-FBI director James Comey to end his investigation into ties between former White House national security adviser Michael Flynn and Russia. The allegations stem from a supposed memo written by Comey.
Renewed demand has helped gold see its best day in a month as prices hit a two-week high. June Comex futures last traded at $1,257.20 an ounce, up 1.68% on the day.
According to some analysts, not only are geopolitical tensions on the rise, but there is growing uncertainty that the embattled President will be able to get his tax reform and deregulation pushed through Congress, which in turn is hurting equity markets. Equity markets have seen their worst open of the year as a result of shifting sentiment in the marketplace.
“The Trump-Comey clash has reduced the president's ability to focus on political and economic initiatives,” said Ole Hansen, head of commodity strategy at Saxo Bank.
While gold has potential to move higher, Hansen warns that investors should pay attention to important resistance levels.
“The five-day rally is likely to face its first proper test today with gold having returned to a band of resistance between $1,245/oz and $1,255/oz,” he said.
Bill Baruch, senior market analyst at iiTrader, said that he is watching gold’s 200-day moving average at $1,256.70 an ounce. He added that while momentum is building, bullish investors need to see prices close above $1,250 an ounce to regain control of the marketplace.
He added that a positive sign for gold is that prices are above a key trendline from the December and March lows.
Chris Beauchamp, market analyst at IG, said that with prices above $1,248 an ounce, the yellow metal has enough room to test resistance at $1,260 an ounce.
In his daily analysis, Jim Wyckoff, senior market analyst at Kitco.com, noted that there were key buy stops at $1,250 and at $1,260 an ounce. A break of these levels could lead to further technical buying.
By Neils Christensen
For Kitco News
