Gold Succumbs to Profit-Taking in Late Afternoon Trading

April 17, 2017 - 5:51pm

 by Gary Wagner

Although tension with North Korea continues to fuel safe haven demand, gold prices sold off moderately in late afternoon trading. As of 2:30 Eastern Standard Time, gold futures are currently trading off $5.00 at 1283.40. Spot gold is also trading approximately five dollars lower at 1281.This follows a three-day weekend in which geopolitical tension and uncertainty about North Korea continue to rise.

Gold Trades Within Dollars of $1300

This moderate sell-off follows higher pricing which occurred as markets opened overseas Monday morning (Easter Sunday in the United States and Canada). Gold traded to an intraday high of 1295.26 (spot price), with gold futures trading to an intraday high of 1297.

The intraday highs achieved yesterday took gold to a five-month high, gaining approximately 3% value over the last four trading sessions. A weak U.S. dollar contributed to the gains. This price advance occurs in response to heightened tensions between North Korea and the United States.

Saturday was a national holiday in North Korea. The country used the holiday to hold a massive military parade. However, North Korea’s failed ballistic missile test the following day heightened an already tense geopolitical environment.

Although the response from the United States was muted, there is real concern that North Korea’s nuclear proliferation could result in a military response, if all diplomatic endeavors fail. Market participants continue to be on edge, and the uncertainty of what lies ahead continues to support gold pricing.

As reported in MarketWatch, “The dollar weakness continues as North Korea’s failed nuclear test left investors wondering what the reaction from the U.S. and its allies will be,” said Naeem Aslam, chief market analyst with ThinkMarkets.

“The demand for other safe haven assets also picked up in the light of this, [with] spot gold is moving further closer to our target of $1,300,” he said. “When it comes to the gold price, we do think that the momentum could easily continue and bias remain skewed for more upside move.”

With the Carl Vincent armada moving closer to the North Korean peninsula, and current rhetoric from North Korea’s leader, it seems unlikely that tensions will subside anytime soon. Moreover, the likelihood that these pressures could result in some sort of military response have not diminished.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action
Last Tuesday (April 11)  we sent out a trade alert:  Major breakout above resistance. June gold up 19 dollars at 1273. Buy gold at market (1273 current). Stop under 1260
Maintain long gold at 1273. Maintain Stop below 1260 ** (Current 1286.30)
** We will move stop up within the next 48 Hours
Gold Market Forecast

Gold continues to find support even though we saw prices softening as we went into the market close today. Whether the late trading session selloff was due to profit taking or to the US dollar trading off of the intraday lows, the fact of the matter is gold is still showing tremendous strength and support certainly due to geopolitical tensions which have not subsided. Today's video will look at our current trade but also a long-standing resistance line that can be drawn from the highs at 1900 to current pricing.

Trending Markets Forecast

An extremely strong day for US equities, given the geopolitical tension in North Korea. A dynamic start to the week with the Dow Jones industrial average closing up over 180 points on the day gaining 9/10 of a percent. The US dollar continues to trade modestly lower along with crude oil.