Tactics and Analysis, July 5, 2017 – Gold’s Return to Volatility

Gold has seen a steep selloff the past week. Speculation continues to produce volatility in the commodity. Reversals should be looked for by traders and risk management will be needed.

Gold and Short-Term Risks

Gold has seen numerous surges the past couple of weeks and the precious metal has fallen to important support levels in the short-term.

The 1225.00 U.S Dollars an ounce price is providing an important focal point the past couple of days. Yesterday’s trading volume in Gold was relatively light due to the U.S holiday, but the return of full volume today opens the possibility of more sudden movements.

Risk events in Asia regarding North Korea, and the developing crisis between Saudi Arabia and Qatar have gotten the interest of investors. However, any concerns about the need to seek safe havens have not created upwards momentum in the past couple of days.

Central Bank Concerns via Interest Rates

A look at a mid-term chart shows Gold’s prolonged battle with volatility. And there is no reason for anyone to think the precious metal is going to suddenly become a tranquil market. Last week’s get together of the world’s leading central bankers in Portugal produced rhetoric about tightening monetary policy.

Comments from European Central Bank President Draghi and Bank of England Governor Mark Carney, created the notion their respective central banks will begin to increase interest rates early next year. The prospects of higher interest rate yields from central banks has hurt Gold in the short-term.

Inflation Prospects for Gold

However, Gold likely still has plenty of traders who will continue to speculate on upward movement. If investors are convinced global growth is improving and inflation will therefore follow, this will create ammunition for buyers to enter the Gold market.

The volatile trading of the precious metal is far from done. The U.S Federal Reserve will issue its Meeting Minutes report later today, and it could offer some interesting clues about the U.S central banks outlook for monetary policy.

Risk management is essential with Gold because the commodity will continue to produce fast conditions as speculative elements try to position themselves. Traders will want to be on the lookout for potential reversals.

In the short term, we believe Gold may be positive. In the mid-term and long-term we are unbiased.

Yaron Mazor is a senior analyst at SuperTraderTV.

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