Gold Back Above Key Support As USD Cools
Gold Rebounds
Gold prices are stabilising today with the futures market trading back above a key support level following a break below yesterday. XAUUSD is sitting back atop the 5,113.51 level today, helped by a cooling in USD as the DXY eased back from the multi-month highs yesterday. USD has been the preferred safe-haven vehicle across the initial reaction to news of the US/Israel conflict with Iran. However, price action today suggests that flows are perhaps starting to shift into gold and away from USD as traders monitoring the ongoing situation.
US Military to Protect Cargo Ships
The shift lower in USD appears linked to Trump’s announcement that the US military will provide a chaperone for ships looking to pass through the Strait of Hormuz as well as federal insurance for shipping fleets. Iran had earlier announced that the Strait was now closed off and any ships attempting to pass through would be fired upon. This of course holds massive repercussions for world trade, particularly energy distribution. In light of Trump’s announcement, however, traders are hopeful that the Strait can remain open. In this scenario, USD could continue to pullback from highs with gold poised to recover further ground. The question now is whether any ships will want to take the risk of travelling through the Strait and whether Iran targets them as signalled. As such, near-term risks remain and incoming headlines need to be closely monitored.
Technical Views
Gold
For now, gold prices are trading back above the 5,113.51 level and while that area holds, focus is on a continuation higher with the 5,603.83 highs the next objective for bulls. Should we break back below that level, however, focus turns to the bull channel lows as next support ahead of the deeper 4,548.82 area.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.