Gold eyeing R3 at $1,303 on rising risk aversion
- Gold has picked up a bid and the backdrop is supportive for higher prices still with eyes on R3 at $1,303.
- Currently, the price is located at $1,292, up from $1,284 and below the $1,293 high.
An additional wave of safe haven flows piled int the yellow metal at the start of 2019 following a turbulent time into the final month of 2018 on concerns over the outlook for global growth. Apple announced a rare cut to its sales forecast, citing sluggish economic growth in China and the longstanding tariff dispute between Beijing and Washington as an additional factor.
The Chinese data disappointment sparked up the angst and then the concerning news from Apple sales in China hammered the nail on the coffin. The news sent gold futures on Thursday toward its highest level in more than six months as U.S. stocks staged a sharp pullback in the mayhem and the dollar softened against the backdrop of growing expectations of a pause in coming rate increases by the Federal Reserve.
"Rising risk aversion is set to fuel demand for safe havens, including government bonds. The 10-year German bund yield plunged to the lowest level since 2016 and the US Treasury yield extended its recent decline to a 12-month low. It’s worth noting that the former fell below the important technical pivot around 0.28% before running into support provided by the 2017 low at 0.156%," analysts at Rabobank explained
The technicals stay bullish while RSI en route towards the prior highs for 2017 and 2018 levels. The 2018 50% Fibo level at 1262 was a key target which has been breached. 1287 is the 2018 61.8% Fibo acting as a key support at this juncture with sights set on 1317 as the 76.4% Fibo. On the flipside, the 21-D SMA is now found down at 1255, although while above the pivot located at 1285, the focus is on the upside.