Spot gold is down more than 1%, weighed by continued strength in the dollar. The breach of support at 1204.52/1200.00 puts the yellow metal at new 17-month lows.
Gold was unable to sustain intraday upticks on Friday, resulting in a fifth consecutive lower weekly close. That left the yellow metal vulnerable heading into this week. Minor secondary support at 1194.88 (10-Mar-17 low) has been exceeded as well.
We had been thinking that one last run below $1200 might be needed to shake out any stubborn longs. The next chart levels to watch are 1130.02 (Nov 2014 low) and the more important 1122.61 low from 15-Dec-16. Given how short the market is already, and the worsening oversold condition, a downside extension to these levels should prove difficult without first seeing some sort of corrective price action.
With no let-up in U.S./China trade tensions and the worsening situation in Turkey, safe-haven flows into the dollar and Treasuries continue to pose a significant headwind to gold. The USD-TRY rate set more new record highs above 7.00 today.
Other emerging currencies are under pressure as well, amid rising concerns about contagion. Investors are also looking at the banks and countries with significant exposure to Turkey and other emerging markets.
As the broad market instability worsens, gold may start attracting more haven interest, allowing it to stabilize. We may have seen a little hint of that in early trading on Friday, but clearly it was a short-lived.
Silver has extended to the downside after notching a ninth consecutive lower weekly close on Friday. Silver has probed below $15, shifting focus to minor chart support at 14.78. Below that, 14.60 would attract.
The move away from the 9- and 20-day moving averages leaves the upside well protected at this point. A close above the latter is still needed to ease at least short-term pressure on the downside.
Now that gold has seemingly picked a direction, platinum and palladium are back under pressure after a brief period of corrective/consolidative activity. Platinum has moved back within striking distance of the near-10-year low at 795.02 (19-Jul). Palladium has retraced more than 61.8% of the corrective bounce, putting the 859.06 low (19-Jul) back in play.
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