Gold flat as stocks move higher
Gold prices were relatively flat in trade on Wednesday as the SP 500 went on to notch another new all-time high.The gold market appears to be a bit on the weaker side in the absence of any fresh bullish inputs. It is somewhat amazing how markets have appeared to simply shrug off the current geopolitical risks and move higher in light of several conflicts raging around the globe. Some people attribute the stock market's resilience to the amount of money that has been pumped into global economies by central banks in recent years. There still appears to be money sitting on the sidelines waiting to go to work, and perhaps that is what continues to fuel risk assets in light of current geopolitical headwinds.
The gold market seems to be in a consolidation mode and looks to be coiling ahead of a potential breakout. The question is-in what direction will the market break? Normally, one would think that the path of least resistance would be higher, but given investors' risk appetite levels in recent months one could also reasonably argue for a potential downside break in gold prices. The bulls have thus far been able to hold the $1300 level, but that level seems to look a bit shaky. A break below this level could trigger sell stops and drive prices lower rapidly. In order for the bulls to gain some momentum, they must put some distance between gold and this level. The next few days may be very telling in the gold market as prices look for the next directional catalyst. The market will remain subject to headline risk and also likely take cues from stock market strength or weakness.
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24 Jul 2014