Where next for gold?
I came across a couple of interesting posts on Bloomberg's MLBlog making a case for gold prices to fall.
Firstly from Ye Xie on Tuesday who suggested that gold is almost certain to record losses in the next two weeks, if history is any guide. He posted up a chart showing that in the three previous occasions that the 14 day RSI index rose above 85 (Oct 2010, Feb 2016, June 2019) gold prices fell in the next 10 trading days. See chart below
Secondly from Mark Cudmore yesterday who , though a gold bull, presented the case that the last overnight move in gold got carried away. He messaged up a good quote from one of his ex-colleagues who said that, 'Iran poked the bear and threaded the needle. Now for the cool down period.' His ex-colleague is targeting a move down to $1540. Mark caw a potential deeper pullback to $1517
So, two posts saying a similar thing. This chimed with my instincts too as I took gold profits on Monday at around $1572. It all looked a bit stretched. So, I guess we go back to waiting and seeing. Will the situation keep escalating or not? The answer so far is a resounding no. President Trump's speech last night and lack of an Iranian response sets the tone for now. For me, the key to the price of gold, is the extent to which the escalation does or does not occur. How far, if at all, does the US retaliation go? I am looking for geo-political moves to signal gold prices further and relying on the squawk to act quickly if necessary.