This vulnerability came on display towards the end of the week when a stronger dollar and rising US equities once again reduced the appeal of the yellow metal. Funds, keeping positions on a short leash given recent failures, were quick to reduce longs thereby sending gold straight back towards support and another battle for survival. So far this Monday the price has stabilised ahead of the double bottom at $1,266.5/oz with an escalation of the trade war (read latest updates from John from John Hardy here
and Peter Garnry here
having sent US stocks back on the defensive ahead of the opening.
Gold’s lack of momentum despite an escalating trade war, raised concerns about stability in the Middle East, recent stock market gyrations and bond yields near an 18-month low have left potential investors frustrated and sidelined. Last week’s failed attempt only strengthened this hesitancy and while we see no fundamental reason to sell gold the short term direction is likely to be dictated by the potential need from longs to reduce exposure further.