Gold trades at its highest levels since 2013

Gold D1 05-08

Gold is up by more than 1% on the day as safety flows dominate and price is extending gains for the year, reaching its highest level since May 2013.

Looking at the daily chart, price is still trading in an upwards channel and is testing levels near the topside of the trendline resistance @ $1,461.57. For buyers to find further momentum to the upside, they need to break above that.

The risk for a downside move is if price starts to fall back below the channel and trendline support seen just above $1,400 - a key psychological level as well.

In the bigger picture:

Gold W1 05-08

The break higher in gold here could be the start of a larger trend higher towards $1,500 first before aiming for $1,600 and beyond. The key tailwind for gold in the longer-term outlook is that we're seeing a continued slowdown in the global economy and central banks easing monetary policy further - prompting bonds to rally i.e. yields to fall.

As long as that remains the case and US-China trade tensions fail to be resolved, the run higher in gold still has legs to go. However, the thing with most market moves is that they never do come in a straight line.

As such, be wary of potential retracements over time but should gold be able to keep the key tailwind above, it's not hard to imagine more and more investors finding the commodity to be increasingly attractive - especially when you don't even get anything out of sovereign bonds in the likes of Switzerland and Germany these days.