Market Snapshot – Risks and Tension Rise as US Cancels Talks

Rise in Tension

Today marked another day of rise in geopolitical tension around the world as Trump and the US confirmed that they have cancelled their scheduled summit with North Korea that was supposed to be held in June. This has marked a large turn around in the tension in that region which had seemed to taper off after the successful meeting between the leaders of North and South Korea a few weeks back. This had led to the belief that more such measures would follow and that it would lead to a de-escalation of tension in that region but alas, that was not to be. This has led to the to weakening of the dollar and the increase in demand for safe haven assets and this is the trend that we have been seeing over the last couple of days. This is likely to continue in the short term as the market digests this news and also watches how the situation develops in the coming days.

Gold Prices Rise

This is good news for the gold bulls which has since shot higher through the 1300 region and now trades in the support turned resistance region. The prices have rebounded smartly from the support at the 1280 region over the last few days and we will have to wait and watch the price action in this region to see whether the bulls have enough momentum to continue the push higher. Of course, this depends a great deal on how the situation in the region around the Koreas develops over the next few days and how the US is going to react to these developments. On the economic front, the Fed did not add anything in their FOMC minutes which the traders and the market did not already know and that has led to some mixed trading as far as the dollar is concerned.