Traders look to hedge in Gold

14 February, 2017

The world and the markets continue to struggle to focus on economic data as Trumps economic policies take centre stage. This should come as no surprise these days given the power one man can wield on an economies; as we saw with Abenomics. But that was just Japan and the US market is the world's largest free market and is Trump is throwing his weight around, which in turn has led to strong movements and volatility being one of the major themes of the market.  Commodities have so far been a mixed bag for most traders in the market, however trending is become a key theme and the metals market is looking tradable in its present form.

Gold has been on the upside in the recent weeks as Trump continues to put pressure on the market, especially around his comments on currencies and the fact that a number of countries should stop manipulating their currency. There is further speculation that Trump may in fact also start a currency war globally, however how that would look is still unknown and also comes with large risks for the US economy - large fluctuations might be good for traders, but for an established economy it can cause a world of pain. If exports are winners in the long run, then importers and the general consumer are worse off and vice versa.

Gold has so far but in a very bullish trend for a few weeks and it looks set to continue as people look for a hedge in the event of a currency war. Resistance at 1245 held up quite nicely when pushed over the last few days, but after the quick drop gold has found support on the 100 day moving average. Any further drops for Gold are likely to find support at 1208, but even before that the 20 day moving average would also be something to consider and watch. If Gold continues to run higher then I would expect the next major level of resistance to be found at 1262 and it may look to take a breather at this key level.

Oil has also been another major player in the market that everyone is taking a tough look at, after last week's oil inventory data shocked the market coming in at 13.83M barrels (2.53M exp). This was a quite a large inventory build up and was somewhat unexpected after the recent cuts from OPEC back a few months to help bolster prices. Additionally America picking up pace was also expected to cause further increases in demand.

Technically speaking, Oil on the charts though has so far failed to breach through the resistance level at 54.46 and unless we see further cuts of even a pick-up in demand then it could actually slide further down the charts. So far the 20 day moving average and the 50 day moving average have been slowing down any bearish movements, but it's only a matter of time before it slips lower unless we see some changes.


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