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Gold back around the pivot and failing below 1300 psychological level

  • Gold prices have been sent lower after hitting a high of $1,296/oz on a spot basis following the Chinese trade balance miss overnight.

The precious metal seems to have lost a speculative bid, with the greenback moving sideways within a familiar tight range of between 95.48 and 95.72.  February gold closed on Friday with a 0.3% weekly advance and futures prices, which touched an intraday high of $1,296.60, are looking for a break beyond the psychologically  $1,300 level to spur on the next round of speculative bids.  

Risks ahead

Looking ahead, there are plenty of risk factors in play this week and we will stat with Brexit. Brexit is going to be the event of the week with the PM's deal going to the House of Commons on Tuesday for a vote, widely expected to be turned down which will give rise to a potential leadership challenge as soon as Wednesday. 

At the same time, this week will be a busy schedule for Fed speakers again before the blackout phase ahead of the Fed January 30 interest rate decision. The FOMC will enter blackout on 18 Jan.  The most important speaker this week, one of six, will be New York Fed's Williams on Friday. However, the dovish tone expected will unlikely give us too much new to go on and the dollar will likely remain under pressure, offering gold another upside potential. 

Gold levels

However, persistent failures below 1300 and with the price now back around the pivot of 1291 opens up the case for 1280. The 2018 50% Fibo area at 1262 will then come into play. RSI and MACD are still leaning with a bearish bias. On a break of the 1300 level opens a run to 1350.

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