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Non-Farm Payroll look-ahead - Video Update
31 Aug 2017
Tech stocks lead market recovery - AM Briefing
31 Aug 2017
Fall-out from Jackson Hole - Video Update
30 Aug 2017
Investors shrug off North Korean missile launch - AM Briefing
30 Aug 2017
Gold breaks through $1,300 - PM Bulletin
29 Aug 2017
Equities slide after North Korean missile launch - AM Briefing
29 Aug 2017
Yellen and Draghi in focus - AM Briefing
25 Aug 2017
Jackson Hole look-ahead to key speeches - Video Update
23 Aug 2017
Wall Street surges on tax reform hopes - AM Briefing
23 Aug 2017
Euro slips, but range-bound ahead of Jackson Hole - PM Bulletin
22 Aug 2017
Equities recover in early trade - AM Briefing
22 Aug 2017
Equities under pressure as Trump struggles - AM Briefing
21 Aug 2017
Equities fall as investors find reasons to sell - AM Briefing
18 Aug 2017
ECB and FOMC minutes lead to FX volatility
17 Aug 2017
FOMC minutes viewed as dovish - AM Briefing
17 Aug 2017
FOMC minutes in focus - Video Update
16 Aug 2017
Fed minutes in focus - AM Briefing
16 Aug 2017
Sterling slips as inflation steadies - PM Bulletin
15 Aug 2017
Equities continue to recover - AM Briefing
15 Aug 2017
Gold: triple top or third time lucky? - PM Bulletin
14 Aug 2017
Stocks bounce as geopolitical risk eases - AM Briefing
14 Aug 2017
Bank of England rate decision in focus - AM Briefing
03 Aug 2017
Crude breaks above resistance - PM Bulletin
02 Aug 2017
Apple rallies 6% on strong report - AM Briefing
02 Aug 2017
Cable breaks above 1.32000 - PM Bulletin
01 Aug 2017
Apple to report after the close - AM Briefing
01 Aug 2017
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Five weeks ago gold was in decline and on course to break below $1,200 for the first time since early March. But since then it has staged a solid recovery, capped off by the sharp rally which began in the middle of last week. This last move saw gold come within a few dollars of $1,300 for a low-to-high rally of just under $90 (around 7%) since early July. It’s also worth noting the move in silver which has been even more pronounced - up 6% in a week.

Investors rushed to hoover up both precious metals as they sought out safe havens. This followed the escalation in tensions between the US and North Korea. Last week President Trump warned that North Korea faced “fire and fury like the world has never seen.”  This followed the announcement that the dictatorship was preparing to fire missiles towards the US territory of Guam in the Pacific. President Trump went on to tweet that: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!" Back in July North Korea caused international outrage when it undertook two intercontinental ballistic missile tests.

But earlier today gold pulled back from its best levels. Investors were relieved that there was no escalation in the bellicose rhetoric over the weekend. In addition, CIA chief Mike Pompeo and National Security Advisor General HR McMaster both said that conflict with North Korea was not “imminent”.  Meanwhile in an opinion piece for The Wall Street Journal US Secretary of State Rex Tillerson and Secretary of Defence James Mattis made it clear that the US was looking to denuclearise the Korean peninsula by negotiation and was not looking at regime change.

But it may still be too early to sound the all-clear. Tomorrow North Korea celebrates Liberation Day which marks the end of Japanese rule. There’s always a possibility that Kim Jong-un may take this as an opportunity to do some grandstanding. The North Korean leader has already indicated that the country was preparing to undertake some action in mid-August. This should all go some way to supporting gold in the near-term. Meanwhile, the technical picture for gold is ambiguous to say the least. A look at the chart shows how gold appears to be topping out above $1,280 for the third time this year. This could turn in to a triple top which is a classic reversal pattern. On the other side of the argument bullish investors will point to a series of higher lows made since December 2015. Nevertheless, gold really needs to break and hold above $1,300 before the end of this month to set itself up for more significant gains. 



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Posted by David Morrison

Category: PM Bulletin

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