Spot gold is up modestly within the recent narrow range, despite a surging dollar. The yellow metal seems to have some underpinning from safe-haven interest amid escalating trade and FX market turmoil.
Gold has been confined to a $12 range this week, unable to push through 1204.52/1200.00 support zone and unable to gain any traction above its 9-day moving average. A close above 1213.47 is needed to avert a fifth consecutive lower weekly close.
The dollar index is up nearly 1% on the day and trading at 13-month highs. With the dominant uptrend in the greenback reestablished after several weeks of corrective/consolidative price action, one can’t help be impressed that gold is not only holding support, but higher on the day.
The DX appears poised to close above both the 100- and 200-week moving averages. In addition, the 50% retracement level of the decline from 103.82 (03-Jan-17 high) to 88.25 (16-Feb-18 low) has been penetrated. Fibonacci analysis would now suggest the 61.8% retracement level at 97.87 is the next objective.
Such a move in the dollar is likely to result in a pretty considerable headwind for gold, unless of course there is also a considerable shift in safe-haven allocation toward the precious metals. We’d need to see a short-term close above the 20-day moving average in gold (1221.45 today) to feel even marginally encouraged.
However, lest you think the gold market is totally boring, I present to you gold priced in Turkish lira:
XAU/TRY was up nearly 23% at one point intraday and is up well over 200% over the last 5-years. The Turkish lira has also lost about 70% of its value against the dollar and more than 60% of its value against the euro over that same 5-year period.
Today, Turkish president Recep Tayyip Erdogan asked his people to convert their dollars and “gold under the pillow” to lira. This prompted Bloomberg’s Eddie van der Walt to tweet the following:
I couldn’ t agree more. When the head of your country pleads with you to swap your gold for a tanking fiat currency, that’s the last thing you want to do.
Silver remains narrowly confined within its recent range. A close above 15.364 is needed today to avert a ninth consecutive lower weekly close.
Silver has been tracking its 9-day MA (15.40 today) pretty closely over the past couple weeks. We saw a brief probe above the 20-day MA yesterday, the first since June. A close above the 20-day (15.46 today) would ease at least short-term pressure on the downside.
Platinum and palladium remain consolidative as well within their recent ranges. All eyes on the gold market at this point.
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