Webinar: What's next for commodities?
Join Saxo Head of Commodities Strategy Ole Hansen as he explores the state of play in crude oil, gold, copper, and other key commodities into 2019.
Head of Commodity Strategy
Gold is trading back above $1,200/oz as it continues to recover from its mid-August nadir. A continued recovery could eventually trigger an accelerated rally due to short-covering from hedge funds currently holding a record short. For now, the key source of inspiration for gold traders remains USD, and this is true for both bulls and bears.
The strong dollar surge following the collapse of the Turkish lira was halted in mid-August when President Trump criticised the Federal Reserve while saying that Jerome Powell had not been the cheap money chairman he had hoped for, and as a result the dollar was too strong.
(Some other reasons for the latest dollar weakness and renewed appetite for risk can be found here in John Hardy’s latest forex update.)
Gold is currently challenging the next area of resistance at $1,217/oz with a break above opening up for a move to $1,235/oz. Continued dollar weakness is needed to trigger a short-covering rally from funds holding a record short.