It looks like it was the Ukraine that started the spike in gold yesterday just as our market was closing. However USD also took a sharp dive which itself was enough to move gold as much as it moved last night. With the USD diving sharply I wonder if the market is starting to expect a pause to tapering. If that happens, POG has a strong chance of moving straight back up to recent highs and beyond.
"Comex Gold Jolted Higher By Renewed Ukraine Tensions, Soft Dollar By Allen Sykora of Kitco News Tuesday April 8, 2014 10:10 AM
(Kitco News) - The combination of renewed Russia-Ukraine tensions and a softer U.S. dollar pushed gold futures to their highest level Tuesday in nearly two weeks.
Ukraine’s government sent security forces to the country’s second-largest city of Kharkiv after pro-Moscow protestors seized public buildings in eastern Ukraine. The government characterized a move to clear out protestors in Kharkiv as an “anti-terrorism” campaign, but Russia warned that any use of force could lead to a civil war. Moscow also alleged that American mercenaries from a private military organization have joined Ukrainian forces.
“I would attribute the gold move to the dollar weakness today and the continuing Ukraine political and social unrest,” said Frank Lesh, broker and futures analyst with FuturePath Trading.
As of 10:05 a.m. EDT, gold for June delivery was $11.30, or 0.9%, higher at $1,309.60 per ounce on the Comex division of the New York Mercantile Exchange. The contract peaked at $1,314.70, its most muscular level since March 26. May silver was up 14.8 cents, or 0.8%, to $20.055 an ounce.
“We ran some big stops once we breached the $1,300 level,” said Jim Comiskey, senior account executive with Archer Financial Services. Stops are pre-placed orders activated when certain chart points are hit.
Additionally, stops appeared to be hit as gold moved up through last week’s high, Lesh said. The contract peaked last week at $1,307.50 on Friday.
“The Ukrainian situation is escalating,” Comiskey said. The tensions are back in the forefront for the market after it seemingly was preoccupied with prospects for Federal Open Market Committee monetary policy since members met in mid-March.
“Now, it looks as if we have protesters in eastern Ukraine who are talking similar to what Crimea was – that they would like to be part of Russia,” Lesh said. “It looks as if this is going to be the next battlefront or at least a front in their political situation.”
And that, he said, prompted safe-haven buying.
Meanwhile, the euro rose to $1.38050 from $1.37409 late Monday.
“Right now, the dollar has faded a little bit,” said Tommy Capalbo, precious-metals broker with Newedge. “So you have people running towards gold again.”
He said also some traders who held short positions, in which they previously sold, are buying to cover or capture profits. In particular, this might be squaring up ahead of the Wednesday release of the minutes of the March minutes of a FOMC meeting, he added.
Additionally, Comiskey said, gold appears to be benefitting from some rotation out of equities after a sharp sell-off in the stock market the last two business days."
Gold is showing medium term strength. It is starting to find support on a now rising 200DMA and currently holding just below the 50. It is also currently threatening to break through the 50DMA. Another break above the long term declining trend line around $1330 (taking out the 50 and 30DMA's along the way) would be very bullish. That would likely see the March high taken out for a move towards 1525. It is positive that the break below the longer term declining trend line and then the 30,50 and 200DMA's did not see a continued slide back to the lower end of the trading range, despite the probability that many sell stops would have been triggered around those levels. It is instead back above the 200 and pushing into the 50DMA. It may turn down again when it retests the trendline but if it then holds just below that trendline, then another break up will look likely. Continuing congestion between the 200DMA and the trend line will be positive.
ABU Price at posting:
2.4¢ Sentiment: LT Buy Disclosure: Held
(20min delay)