Gold Bounces Back

Gold prices are bouncing back today, in line with the pullback in USD, as traders react to the latest headlines around the Iran war. Trump told reporters yesterday that the US has ended its war with Iran and expected a dela to be announced imminently once final documentation has been delivered. Trump even went on to opine that there might be a signing ceremony for the deal in Europe.

While Iran has not yet confirmed or commented on Trump’s statement, oil prices have fallen sharply, USD has pulled back from the week’s highs and stocks and gold are rallying. The impact of the Iran war has been fairly unique given that gold has ended up trading in line with risk assets as a counter to USD moves. Typically, gold prices would drop in reaction to lessening geopolitical risks. However, given that USD and oil have been trading in tandem gold is rallying in response to today’s news and, if a deal is announced, looks set to advance further if we see a sharp drop in USD consequently.

Iran War Volatility

Ahead of Trump’s comments gold prices had been under heavy selling pressure with the futures market yesterday breaking down to fresh YTD lows before reversing higher. News of fresh attacks between the US and Iran and Trump’s warnings of severe action to come (if a deal is not done) saw USD and oil prices pushing higher as gold and stocks feel. Today, this dynamic is reversed amidst rising optimism over a potential deal. If a deal does materialise, gold looks likely to rebound sharply higher as oil and USD fall. However, if a deal doesn’t come through and further attacks are reported, this could see gold breaking down heavily lower as USD and oil spike higher again.

Technical Views

Gold

The sell off in gold saw the market briefly dipping below the 4.092.60 level to trade fresh YTD lows before reversing back above. While below the broken bull trend line, however, and the 4,389.24. risks of a fresh pish lower are seen with 3,898.03 the deeper target to note. Above 4,389.24, 4,558.62 is the next bull target.