Gold exchange traded funds, such as the SPDR Gold Shares (NYSEArca: GLD), have been rebounding and that rally could be sustainable over the near-term thanks to fresh geopolitical concerns, which could buoy gold’s safe-haven allure.
“The U.S. has threatened to punish Saudi Arabia if it turns out that journalist Jamal Khashoggi was killed in the Saudi consulate in Turkey, and Saudi Arabia responded by warning against any threats,” reports Kitco News.
The safe-haven status of gold, which has been questioned at various points this year, appears to have been renewed over the past couple of days amid heightened equity market volatility. The recent rally in gold comes amid extreme short positioning in the yellow metal and could force traders that short the yellow metal to cover those positions, likely adding to bullion’s near-term upside.
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Importantly, gold prices have recently stayed above the mid-August lows and a move further above $1,200 per ounce could trigger more buying.
Looking Appealing Here
“Technically the market is still looking fairly positive, [with]gold still trading above a sequence of highs dating back two months ($1,210-1,216),” MKS says. “Going into the week, the next key upside target was the 100-day moving average, which MKS says was around $1,228.20. Chart support sits around $1214-16,” reports Kitco.
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September market the sixth consecutive month of losses for gold and some technical analysts believe the yellow metal needs to steady above the $1,200 to $1,210 per ounce area to encourage short covering, which stoke a swift rally.
“Gold bulls’ next upside near-term price breakout objective is to produce a close in December futures above solid resistance at $1,250.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,200.00. First resistance is seen at today’s high of $1,236.90 and then at $1,240.00. First support is seen at $1,225.00 and then at today’s low of $1,220.40,” notes Kitco.
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Tom Lydon’s clients own shares of GLD.