ALERT: Gold trades to $1600 following missile attack on US troops in Iraq

This is being written as of 6:51 PM Eastern standard Time. Reports have surfaced that Iran launched "tens" of surface to surface missiles at Iraq’s Al Asad airbase. Gold is currently trading up over $21 on the day at $1596, as it trades lower from its recent climb to $1600 per ounce. We can expect fast market conditions as more news becomes available on this event.

Iran’s revolutionary guard takes responsibility for rocket attack targeting United States troops

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Despite dollar strength, gold continues to gain ground and move to higher pricing. One of the easiest ways to view this is through the Kitco Gold Index (KGX) which looks at spot gold and breaks down the net changes from buying/selling, as well as dollar strength or weakness. As of 4 PM EST spot gold is currently fixed at $1571.50 however on closer inspection traders have bid the precious yellow metal up by $12.70 (+0.81%) in value today. Those gains were cut in half by dollar strength subtracting $6.40 from gains today.

As of 5:09 PM EST gold futures also scored muted gains with the most active February contract currently up $7.30 (+0.47%) and fixed at $1576.10. Just as in the spot market gold futures were muted by dollar strength today with the U.S. dollar index currently up +0.245 points (+0.25%) and bid at 96.595.

Most impressive is the fact that gold has continued to gain value now for the 10^th consecutive day. Traders and market participants are still deeply concerned about the future actions of Iran, and an anticipated retaliation for last Friday’s drone strike by the United States which took out their second in command keeping safe haven assets in high demand.

Along with the current geopolitical hotspots (Iran and North Korea) are recent actions by central banks worldwide which have definitively continued to accelerate their accommodative monetary policy.

The United States Federal Reserve not only cut interest rates three times last year, but have slowly beefed up their asset balance sheet to the tune of $60 billion in purchases per month. Although Chairman Powell is on record stating that this is not any form of quantitative easing, recent Fed activity is very reminiscent of the QE programs they implemented following the 2008 global recession.

The People’s Bank of China recently reduced the portion of deposits that commercial banks are required to set aside as reserves by half a percentage point a move that essentially adds 800 billion yuan into their financial system. The European Central Bank continues an accommodative monetary policy, and the Bank of Japan continues to offer negative interest rates.The fundamentals currently affecting gold pricing continue to be highly supportive of the precious metals and such these factors could easily continue to move gold pricing higher.

 On a technical basis market forces took gold pricing to a low this morning of $1557 which effectively filled the gap that was created from Friday’s close and Mondays open which resulted in a price void. The fact that once the lows today were achieved buyers quickly entered the market and bid gold prices higher expresses the profound interest in the precious metal.

Our technical studies indicate that the high achieved last year between $1560 and $1565 continue to be a level of support. If this level holds our upside target suggests that gold will move closer to Mondays high of $1590, and possibly challenge $1600 per ounce within the next couple of weeks. These studies also indicate that gold could trade as high as $1630 over the first month of 2020.

Wishing you as always, good trading,