Gold prices are trading at their highest level since September 29 on renewed concerns over North Korea. What we’re seeing today is a follow-through rally
Gold prices are trading at their highest level since September 29 on renewed concerns over North Korea. What we’re seeing today is a follow-through rally in reaction to Friday’s technical closing price reversal bottom which formed after reports surfaced that the rogue nation was planning to test a long-range missile that could be strong enough to eventually threaten the United States.
At 0638 GMT, December Comex Gold futures are trading $1283.50, up $8.70 or +0.67%. Last Friday, the market posted a low at $1262.80.
Additionally, China has come back into the market with a vengeance after sitting on the sidelines during a week-long holiday.
In other news, speculators reduced their net long positions in COMEX gold and silver contracts for the third straight week, in the week to October 3, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.
With U.S. traders celebrating a federal holiday, volume could be light on Monday but this could lead to increased volatility. Additionally, there are no major economic reports until Wednesday when the Fed releases its latest monetary policy meeting minutes. In the meantime, geopolitical risks are expected to drive the price action. They tend to drive investors into safe haven assets like gold and the Japanese Yen.
More rhetoric from the U.S. and North Korea is driving the price action today with no real activity taking place over the week-end. North Korea’s leader said his nuclear weapons were a “powerful deterrent” that guaranteed its sovereignty, hours after U.S. President Donald Trump said “only one thing will work” in dealing with the isolated country.
December Comex Gold is currently trading inside a major 50% to 61.8% zone, bounded by $1286.80 to $1268.90 with buyers threatening to take out the upper level. The trend is down, but momentum has shifted to the upside.
Thin-trading conditions and uncertainty may fuel a rally into $1290.00 to $1296.40 later today if the North Korean story continues to gain traction. If the story fades then sellers will regain control and try to drive prices back towards $1268.90.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.